Chile and Venezuela are capitalist systems; however, the wealth of both countries varies significantly

Chile and Venezuela are two major capitalistic economies of the world. Although both follow a similar system to control the economy, the economy of Chile is a better one compared to the GDP and the inflation levels in the economy and there are differences that exists between the two economies. The GDP of Chile is approximately $295 billion and hat of Venezuela is nearly $64 billion in nominal terms. On comparison of the per-capita GDP, we can see that Chile has a per-capita GDP of nearly $12,600 whereas that of Venezuela is only close to $2300. The following are the major reasons for a difference in the wealth accumulation of Chile and Venezuela

· The falling oil prices and the increased international sanctions have caused the economy of Venezuela to fall behind when compared to the economy of Chile and this has caused a significant loss in the wealth creation process of Venezuela

· The Foreign investment law in Chile gives the foreign investors the same treatment as Chileans and thus Chile attracts a lot more foreign investment compared to Venezuela.

· Chile has an inherent Council of Innovation and Competition which is tasked with identification of new sectors and industry to give proper promotions which has resulted in a much better industrial performance of Chile

· The Fiscal responsibility law of Chile allows for the creation of two major wealth funds, the Sovereign wealth fund, the Pension Reserve fund and the Economic and Social Stabilization Fund which has helped in an increased wealth stabilisation in the economy of Chile.

· Chile is strongly committed to free trade and has signed Free Trade Agreements with many nations across the globe which has helped in a much better wealth accumulation within the economy of Chile

· Chile follows a countercyclical fiscal policy which aims at accumulation of surplus in sovereign wealth funds during period of high copper prices and economic growth and undertakes deficit spending only at times of lower economic growth and copper prices.

· Venezuela depends much on the oil revenues which contributes to almost 95% of the export revenue and hence any international fluctuations in the oil prices would hit the economy and thus affect the wealth creation in a bad manner.

· The higher government spending, minimum wage hike etc have caused the inflation rate to increase within the economy of Venezuela.Thus, we can see that all the above factors have contributed much to the differences in the wealth generation and accumulation of Chile and Venezuela