By Vito Alberti Villalobos – Chile

For much of its history, Chile has been defined by a sharp geographic and economic centralism — a nation where Santiago dominates both politics and development.

Over the past decade, however, that model has begun to shift. A series of policy decisions have aimed to decentralize growth and empower the country’s regions with greater autonomy and fiscal incentives.

Among the most notable outcomes was the creation of the Arica and Parinacota Region under Law No. 20.175, enacted in April 2007. Later, Law No. 20.655, approved in February 2013, strengthened a package of tax exemptions for Chile’s extreme zones, extending their benefits until 2035.

A Strategic Frontier

Arica and Parinacota stand out as one of Chile’s most distinctive regions — geographically, economically, and culturally. Its location on the country’s northern frontier makes it a natural gateway for regional trade and integration.

Few regions in Chile are as closely tied to their neighbors. The border crossing between Arica and the Peruvian city of Tacna is the busiest in the country, with over 6 million people crossing each year. Meanwhile, the Port of Arica handles more than 3 million tons of Bolivian cargo annually, underscoring its strategic importance for landlocked Bolivia.

This bifrontier dynamic creates not only logistical and tourism advantages but also significant opportunities for value-added industries. Many Bolivian raw materials currently shipped abroad could be processed or transformed in Arica and Parinacota, allowing those finished goods to re-enter foreign markets tariff-free under Chile’s network of free trade agreements with major global economies.

Agriculture and Innovation

The region’s fertile valleys and mild climate have also fostered the growth of high-tech agriculture, supplying Chile with fresh vegetables during the winter season — including tomatoes, peppers, and green beans. Over the past decade, major international seed companies have established research operations in Arica, attracted by its stable conditions and advanced agricultural infrastructure.

Culture as an Economic Asset

Arica and Parinacota’s cultural diversity is another driver of opportunity. Its population reflects a unique blend of Chilean, Peruvian, and Bolivian heritage, offering a strong foundation for cross-border tourism. The region is also home to the Chinchorro culture, whose ancient mummification practices — the oldest known in the world — are drawing increasing global attention.

A Powerful Incentive Framework

Supporting these natural advantages, Chile’s Law of Extreme Zones (No. 20.655) provides one of the most generous incentive systems in the country. Investors benefit from:

• A 30%–40% Investment Tax Credit, applied against annual income tax filings

• A Labor Hiring Bonus, for each formally contracted employee

• A Competitive Investment Grant, targeting small and medium-sized investors

These incentives, combined with the region’s strategic geography and human capital, make Arica and Parinacota a powerful platform for investment, innovation, and international trade.

– English Magazine