It wasn't so long ago that fund managers, investors and equity
analysts joked that Chile was like a popular make of cockroach trap
that worked by luring the critter inside a box whose door wouldn't
open outwards.
An individual or mutual fund could invest in Chile, but
repatriating dividends or capital gains was a tricky, expensive
business and often not worth thae eVort.
However, there have been advantages to this for Chile. By locking
up inward portfolio investments, making the Wxed-rate market
unattractive as an arbitrage play, and discouraging Chilean
companies and banks from over-exposing themselves to short-term
foreign credits, Chile has been able to control Xows, stabilize the
peso and inXation, and prevent capital Xight disasters such as
those that afflicted Mexico, Thailand, Russia, and Brazil.
In the past two years, interest rates have dropped to around 6%,
the peso has been...
