This book provides an in-depth analysis of neo-liberal and progressive economic reforms and policies implemented in Chile since the Pinochet dictatorship. The core thesis of the book is that there is not just 'one Chilean economic model', but that several have been in force since the coup of 1973.
The economic reforms imposed by Augusto Pinochet's regime (1973-1990) are often credited with transforming Chile into a global economy and setting the stage for a peaceful transition to democracy, individual liberty, and the recognition of cultural diversity. The famed economist Milton Friedman would later describe the transition as the "Miracle of Chile." Yet, as Patricia Richards reveals, beneath this veneer of progress lies a reality of social conflict and inequity that has been perpetuated by many of the same neoliberal programs. In Race and the Chilean Miracle, Richards examines conflicts between Mapuche indigenous people and state and private actors over natural resources, territorial claims, and collective rights in the Araucania region. Through ground-level fieldwork, extensive interviews with local Mapuche and Chileans, and analysis of contemporary race and governance theory, Richards exposes the ways that local, regional, and transnational realities are shaped by systemic racism in the context of neoliberal multiculturalism. Richards demonstrates how state programs and policies run counter to Mapuche claims for autonomy and cultural recognition. The Mapuche, whose ancestral lands have been appropriated for timber and farming, have been branded as terrorists for their activism and sometimes-violent responses to state and private sector interventions. Through their interviews, many Mapuche cite the perpetuation of colonialism under the guise of development projects, multicultural policies, and assimilationist narratives. Many Chilean locals and political elites see the continued defiance of the Mapuche in their tenacious connection to the land, resistance to integration, and insistence on their rights as a people. These diametrically opposed worldviews form the basis of the racial dichotomy that continues to pervade Chilean society. In her study, Richards traces systemic racism that follows both a top-down path (global, state, and regional) as well as a bottom-up one (local agencies and actors), detailing their historic roots. Richards also describes potential positive outcomes in the form of intercultural coalitions or indigenous autonomy. Her compelling analysis offers new perspectives on indigenous rights, race, and neoliberal multiculturalism in Latin America and globally.
"The "Chilean model" has been expostulated for some time in the Latin American and Caribbean region and elsewhere because it appeared that the country, despite terrible political and economic turmoil, embodied important lessons about economic management." Over the last 15 years, Chile has been the Latin American country with the most consistent and successful economic record. The success of Chile's economic reforms and the subsequent dramatic increase in real income are well known. To a large extent, Chile's positive fiscal outcomes have been the result of sound policies as well as sound fiscal institutions. However, there is room for improvement in the education and health sectors, and the results for Chile in terms of equality of income are not positive. 'Chile: Recent Policy Lessons and Emerging Challenges' presents a series of papers analyzing different aspects of Chilean public policy, which cover economic and social policies as well as regulatory and governance issues. The book is broken down into three parts: The first part examines the contribution of macroeconomic policies to superior outcomes; the second part analyzes the many advances in the social sector and the remaining troublesome issues; and the third part evaluates regulatory reforms and the effects of privatization. Since no public policy model is static, further reforms are needed to maintain Chile's economic growth as well as to respond effectively to public demands. As Chile grapples with its pockets of poverty, the balance between social safety nets and the need for greater efficiency in labor markets, a rebalancing of regulatory powers, and other thorny issues, it will need to rely on its institutional experience in public policy and conflict resolution.
In the last decades, Chile has made tremendous progress towards greater economic prosperity and lower poverty. Per capita income more than doubled over the past 20 years and is now the highest in Latin America. These progresses have now come to a halt. Since October 2019 Chile has faced two unprecedented shocks, the social protests and the COVID 19 outbreak.
This book argues that - in terms of institutional design, the allocation of power and privilege, and the lived experiences of citizens - democracy often does not restart the political game after displacing authoritarianism. Democratic institutions are frequently designed by the outgoing authoritarian regime to shield incumbent elites from the rule of law and give them an unfair advantage over politics and the economy after democratization. Authoritarianism and the Elite Origins of Democracy systematically documents and analyzes the constitutional tools that outgoing authoritarian elites use to accomplish these ends, such as electoral system design, legislative appointments, federalism, legal immunities, constitutional tribunal design, and supermajority thresholds for change. The study provides wide-ranging evidence for these claims using data that spans the globe and dates from 1800 to the present. Albertus and Menaldo also conduct detailed case studies of Chile and Sweden. In doing so, they explain why some democracies successfully overhaul their elite-biased constitutions for more egalitarian social contracts.
Policymakers around the world have increasingly agreed that macroeconomic discipline, microeconomic liberalization, and outward orientation are prerequisites for economic success. But what are the political conditions that make economic transformation possible? At a conference held at the Institute for International Economics, leaders of economic reform recounted their efforts to bring about change and discussed the impact of the political climate on the success of their efforts. In this book, these leaders explore the political conditions conducive to the success of policy reforms. Did economic crisis strengthen the hands of the reformers? Was the rapidity with which reforms were instituted crucial? Did the reformers have a "honeymoon" period in which to transform the economy? The authors answer these and other questions, as well as providing first-hand accounts of the politically charged atmosphere surrounding reform efforts in their countries.
Two Chilean scholars and activists present an original interpretation of the Chilean experience. They cut through the rhetoric surrounding the Chilean miracle and provide an integrated analysis of the process of socioeconomic and political change that transformed their country between 1970 and 1990.
Chile’s pension system came under close scrutiny in recent years. This paper takes stock of the adequacy of the system and highlights its challenges. Chile’s defined contribution system was quite influential when introduced, and was taken as an example by other countries. However, it is now delivering low replacement rates relative to OECD peers, as its parameters did not adapt over time to changing demographics and global returns, while informality persists in the labor market. In the absence of reforms, the system’s inability to deliver adequate outcomes for a large share of participants will continue to magnify, as demographic trends and low global interest rates will continue to reduce replacement rates. In addition, recent legislation allowing for pension savings withdrawals to counter the effects from the COVID-19 pandemic, is projected to further reduce replacement rates and increase fiscal costs. A substantial improvement in replacement rates is feasible, via a reform that raises contribution rates and the retirement age, coupled with policies that increases workers’ contribution density.
This paper estimates potential output and the sources of growth in Chile during 1970-96. Actual output is cointegrated with the quality-adjusted measures of capital and labor, and constant returns to scale cannot be rejected. The estimates of potential output show a positive output gap in the years when the Chilean economy was deemed to be overheated. In 1986-90, the quality-adjusted labor variable explains close to 60 percent of the growth rate of GDP, while during 1991-95 capital formation plays a dominant role. The contribution of TFP growth in Chile is relatively small, but, based on a comparison with European and East Asian experiences, it is expected to increase in the medium term.