Union Bank and Trust Expanding Abroad
Union Bank and Trust “Expanding Abroad”
1. What would be UBT’s country risk exposure if it where to establish itself in Chile
The political risk of Chile is minimum, which makes a very attractive country to start the Latin America Operations of UBT, since the dictatorial military regime led by Augusto Pinochet ended in 1990. After this period, a free elected president was installed and the economy has stabilized from 1991-1997 and has helped the country to secure the country towards a democratic and representative government. Growth slowed in 1998-99, but recovered strongly in 2000.
Chile has a well establish government that also reduces the political risk to enter the country. The government is divided in three branches: Executive, legislative, and judicial. Executive power with president directly elected; successive reelection not allowed. Presidential candidates must win a majority or face a runoff. Under a constitutional reform approved by Congress in February 1994, the presidential term was reduced from eight to six years, the traditional term.
In addition, Chile is a perfect country to establish a UBT division since it maintains relations with more than seventy countries. The restoration of democratic government in 1990, has reestablished political and economic ties with other Latin American countries, North America, Europe, and Asia. United States-Chilean relations have improved considerably since return to democracy and progress on issue of 1976 assassination in Washington of former Chilean ambassador to United States Orlando Letelier and United States citizen Ronnie Moffitt. Although shunning multilateral regional integration schemes, entered into bilateral tariff-cutting accords with individual Latin American countries--including Argentina, Bolivia, Colombia, and Mexico--in early 1990s, as well as negotiated framework trade agreement with United States in October 1990. Since joining the Mercosur Group in 1991, has played active role in promoting democracy within inter-American system.
Indicators:
GDP: purchasing power parity: $ 153.1 billion (2000 estimate)
GPD real growth rate: 5.5% (2000 estimate)
GPD per capita: purchasing power parity: $10,100 (2000 estimate)
GDP composition by sector: Agriculture: 8%
Industry: 38%
Services: 54%
Population below poverty line: 22%
Household income or consumption
by percentage share lowest 10%: 1.2%
Highest 10%: 41.3
Inflation rate (consumer prices): 4.5%
Labor force: 5.8 million
Labor force by occupation: Agriculture: 14%
Industry: 27%
Services: 59%
Unemployment rate: 9%
Budget: Revenues: 16 billion
Expenditures: $17 billion
Major Industries: Cooper, foodstuffs, fish processing, iron and steel, wood products, transport equipment, cement, textiles.
Industrial growth rate: 6%
Agriculture: wheat, corn, grapes, beans, sugar beets, potatoes, fruit, beef, poultry, wool, fish, timber.
Exports: $ 18 billion (fob 2000)
Export commodities: cooper, fish, paper, chemicals.
Export partners: EU 27%
USA 16%
Japan 14%
Brazil 6%
Argentina 5%
Imports: $17 billion (fob 2000)
Import commodities: consumer goods, chemicals, motor vehicles, fuels, electrical, machinery, food.
Import partners: US 24%
EU 23%
Argentina 11%
Brazil 6%
Japan 6%
Mexico 5%
Debt - external: $39 billion (2000)
Economic aid – recipient ODA, $40...