The wine industry of Chile is perhaps one of the most interesting case studies with regard to developing countries in the world. First, it is particularly interesting because prior to 1980, Chilean wine was thought to be of a much lower quality than many of the world’s best wines. However, companies used investors and technology to make the Chilean wine trade one of the most prosperous in the world. Chile has always had a suitable climate for the production of high quality wine. However, the lack of proper wine-production infrastructure was not present in Chile, and so the natural resources went to waste.
Investors, however, saw an opportunity, and invested in the newest winemaking equipment (aluminum barrels, for example) in order to produce more wine. From 1995 to 2005, Chile grew from having ten wine factories to more than 70. Therefore, it seems apparent that the entry strategy of these companies and investors was simply to capitalize on the rich natural resources and natural potential of Chile. AT the same time, the Chilean government responded by lifting trade barriers, signing multiple Free Trade Agreements with some of the largest consuming countries in the world, and subsequently exporting wine to them.
By 2005, Chile became the United Kingdom’s third largest exporter for wine. This was no doubt due to investors building their factories in Chile and then reaching out the European nations. After all, 5% of the population lives on less than $2 per day. This means labor on par with prices in many poor Asian countries. This mixed with stable political systems that protect industry, and rich natural resources, make Chile a near perfect place to produce wine.