Chile, from Santiago to Valparaiso, seems like a series of vineyards and fruit orchards that produce for world markets. Chile is a great wine exporter, which has found a new élan since the end of the military dictatorship. Another industry of the primary sector now vies with wine production for importance. It is salmon farming and is upsetting the coast that lies one thousand kilometers south of Santiago. Fish farming is centered around Puerto Montt, nearby Chiloè Island. It is there that most of Chilean salmon is produced. The industry has reached a size comparable to Norway’s, the world’s first producer. Behind this phenomenon, as in many other socioeconomic developments, there is the visible hand of US capitalism.
As Charles Fishman writes in The Wal-Market Effect, translated into Italian by Egea, Chilean salmon goes to supply Wal-Mart, the colossal chain of supermarkets that dominates US retailing. Wal-Mart has turned salmon in a staple of American households, thanks to policy of super-low prices. Consumption has quadrupled since the early 90s. Wal-Mart ships fresh Chilean salmon in all US cities in less than 48 hours and sells it at prices that are four or five dollars lower than the competition.
The consequences for Puerto Montt are staggering. An economy based on agricultural and subsistence fishing now seems a land of pioneers. Population grows incessantly, and new roads and housing are added at full speed. Euphoria is tangible amidst the streets busy with trucks carrying fish. But there’s a dark side to this. The millions of salmons reared in giant sea farms are changing the ecology of Southern Chile. Nutrients and excrements are depositing at the bottom of the ocean. To set those unbeatable prices, wages are low, hours extremely long, and production waste pumped into the ocean with few qualms.
Copper has traditionally played a leading role in the Chilean economy. The current rise in the price of raw materials is benefiting Chile, which is estimated to grow by 6% this year (compared to 5.2% in 2006). Although a competitive economy, the quality of education and human capital seems lower than potential, due to the legacy of low wages for teachers inherited from the Pinochet years. The population living below the poverty line is 12% and the minimum wage is about €200 per month. Social inequality is high and rapid urbanization compounds its negative effects. All these complex social problems weigh on Ms Bachelet’s coalition government. It’s a center-left government plagued, like in Italy, by internal tensions.
by Giorgio Brunetti,
President of Enter, research center on entrepreneurs and entrepreneurship, Università Bocconi