The Chilean Defense Industry Market Opportunities and Entry Strategies, Analyses and Forecasts to 2016 by calebjackson


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									   The Chilean Defense Industry Market Opportunities and
      Entry Strategies, Analyses and Forecasts to 2016
Chilean defense expenditure grew at a CAGR of 12.62% during the review period to reach a value of
US$4.2 billion in 2011. The country’s military expenditure is estimated to register a CAGR of 11.49%
during the forecast period, and to value US$3.8 billion by2016. Defense expenditure is expected to be
driven by factors such as border disputes, military modernization, and international peacekeeping
missions. Due to the transfer of certain institutions such as Carabineros de Chile and Investigations
Police of Chile to the Ministry of Interior and Public Security, the defense expenditure will decline in
2012 but retain the overall growth rate during the forecast period (reference see graph below).

                                  4.5                                                                    25.0%

                                  4.0                                           23.2%
                                        18.4%                                                            20.0%
   Defense expenditure (US$ bn)

                                                                   14.2%                       17.5%
                                  3.0                                                                    15.0%

                                                                                                                 Growth rate (%)
                                  2.0                                                              4.2
                                  1.5                               2.9                                  5.0%
                                         2.6        2.5
                                  0.0                                                                    -5.0%
                                        2007       2008             2009        2010           2011

                                                Def ense expenditure (US$ bn)    Growth rate (%)

According to CPL, 10% of all export revenues from the state-owned copper company Codelco were
automatically transferred each year to the military, for the purpose of purchasing weapons and
equipment. During 2006–2009, US$4.2 billion were transferred to the military under the CPL. After the
2010 earthquake, funding from CPL to the military was opposed by the public due to lack of funds for
recovery and development funds. According to the new law, the funding from CPL would be
transferred to Economic and Social Stabilization Fund (ESSF) for better use by government

The defense imports declined from US$696 million in 2007 to US$323 million in 2011. During the
review period, funds from CRL were used to make the procurements of weapons and equipments.
However, CRL was removed from 2012 onwards will result to the deficit of funds for more
procurement leading to further decrease in imports during the forecast period.

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