Public And Private Sectors In Chile: Good Economic Performance And Social Unrest (2000-2015)
According to the World Bank, Chile showed a good economic performance between 2000 and 2015, with an average annual rate of GDP growth of 3.92% (World Bank, 2015). Factors as the 1980 Constitution, trade liberalization, structural reorganization of the state and privatizations were fundamental in the development of the country. Nevertheless, social conflicts continued despite the economic perfomance. On one hand, there were student movements, such as the 2006 “Revolución de los Pingüinos”, which were fighting for a more inclusive education. On the other hand, the creation of the Civil Organization "No más AFP" (No more private pensions fund) and its marches, claiming to have a more dignified pension system. According to Garretón&Garretón, "Chile [was] facing an incomplete democracy", since the schemes governing education and pensions were imposed under the 1980 Constitution (Garretón & Garretón, 2010). As is known, this Constitution was adopted under a military dictatorship, but continued in force during democratic regime without major reforms. This paper aims to explain the paradox of a country as Chile that enjoyed economic growth and was internationally admired, but had to deal with social unrest. In order to reach a proper understanding, the analysis of the structure and modus operandi of Chile's public and private sectors will be important. Looking at the public administration, the government aimed to initiate the expansion of decent employment, but the results were unsatisfactory. According to the Third Longitudinal Survey of Companies (ELE3), MSEs accounted for 44.7% of Chilean companies (Ministerio de Economía, Fomento y Turismo, 2015) and, according to the Third Survey of Micro Entrepreneurship (EME3), 26.7% of micro enterprises did not pay wages and generated 15.4% of employment in Chile (Ministerio de Economía, Fomento y Turismo, 2014). This would mean that there was a fragment of the working population without a proper income. Looking at the business sector, Foreign Direct Investment (FDI) played a significant role in the economic growth in Chile (2000-2015). Several authors argue that destination and way of managing the FDI made an impact in the economy and social situation. Moreover, actions were taken to attract a greater flow of foreign capital and consequently, to attain the positive impacts that these would generate in society. In fact, according to the World Bank, FDI increased from US $ 4.8 billion to US $ 20.4 billion between 2000 and 2015 (World Bank, 2015). However, according to the Central Bank of Chile, between 2009 and 2015 11.87% of the FDI was directed to the mining sector and 10.85% to the manufacturing sector (Banco Central de Chile, 2013), and that only 3.8% of the total number of employees in Chile were engaged in extractive activities in 2011 (ECLAC, 2013). The public sector remained largely unchanged during the period of analysis, regarding issues such as the education and the pension system. These two issues were precisely the reasons for the most visible social conflicts in Chile. During 2000-2015, some cases of corruption involving leading representatives from both public and private sectors were presented in the media. These kinds of problems showed institutional weaknesses and failures in Chilean society. Institutional problems in both sectors added to the social conflicts and the cases of corruption would end up showing that the economic development of Chile in the first 15 years of the present millennium benefited to some, instead, to all.
Keywords - Chile, economic growth, economic performance, social unrest, poverty, inequality
JEL Codes - H7: State and local government; intergovernmental policies, O15: Human development, O17: Institutional arrangements, N1: Growth, N3: Welfare, Income & Wealth