CHILE: A permanent struggle against itself

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CHILE A permanent struggle against itself

• 1810-1930
• 1930-1970
• 1970-1983/5
• 1985-1998
• 1998 on

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1810-1930

• After the Independence in 1810, Chile experienced
  a political turmoil until approximately 1930,
  when the idea of an impersonal and
  institutionalized political structure was
  developed. This, together with an increasing
  opening of the economy was able to provide
  political stability and several social
  improvements. By the end of the XIX century a
  serious effort was undertaken to start spreading
  public education for the majority of the
  population. According to current standards the
  achievements were not very impressive, but
  education was a

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Political stability together with a promising
Economy until 1930

• social concern. Many world renown scientists
  were invited to Chile and interesting works were
  developed in civil engineering, botanic and
  mining. Immigrants from Europe, especially from
  Germany where seduced to move to this little open
  economy that has to struggle on the midst of the
  technological transformation brought by the
  industrial revolution and the up surge of
  international trade.

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The psychological impact of the 30 Crisis.

• Chile was seriously wounded by the crisis of the
  thirties, politically, socially and economically
  wise. We had a coup detat, unemployment reached
  more than 30. Violent social strikes unknown
  until then were daily events. Chile was ousted
  from international financial markets for almost
  20 years. Why we were damaged in such manner,
  having had our house in order? No major fiscal or
  external imbalances were registered until then.

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Never more trust on others

• From now on, lets base future progress on our
  our own domestic capacities. Was the moto! But we
  are so small! some argued. Thats the reason that
  allow big fishes do what they want with us. A big
  hope of social cohesion and tailor-made
  industrialization were expected to stem out of
  close economy. A friendly horizon was foreseen.
• Instead, as the initial hopes vanished, a long
  route of frustrating social results and permanent
  fiscal crisis, appeared to be the unavoidable
  destiny of the country.

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The Cold War was of no help

• Naturally, political disputes soon gave way to
  violent social confrontations. Extreme
  ideological discussions spread out a veil on the
  very nature of Chile backward state. Education,
  openness to the rest of the world and political
  stability, prized values during the XIX progress,
  gave way to unfinished debates that confronted a
  weakened free society with the mythological
  future splendor offered by Marxism. The end of
  the story is well known. The institutional crisis
  of the seventies, flourishing out from a
  devastated country.

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1980 The reshaping of the Economy and the New
Political Structure of the Country

• A new political system was established in order
  to secure an open society in which the
  authorities take responsibility of theirs
  decisions they are empowered to, while submitted
  to some checks and balances. All liberties
  secured by a collaborative and stable
  institutional structure.

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The Economic Reforms of the Eighties

• Basically all the transformations were headed to
  permit the conditions of the economy to compete.
  Reduce the size of the state in order to free
  private energies, free markets operating with
  sustainable and stables rules, open the economy
  and encourage savings in order to have the
  resources to finance a growing investment demand.

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Unmentioned difficulties to overcome when
structural reforms are undertaken

• A long time closed and fully regulated economy
  prevent the development of entrepreneurs except
  for those operating on the black markets. The
  economy is on the hands of bosses and
  functionaries, not entrepreneurs. Education is
  not set to prepare for competition, but for
  regulation. This is one of the major difficulties
  when markets are liberalized. The set of values
  are very different between this two cultures, is
  not just a problem of technical training.

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Achievements started to show up by mid eighties
and lasted until 1998

• 14 years with an average rate of growth over 7
• Domestic savings up almost 30 of the GDP.
• Foreign trade representing more than 50 of the
  GDP.
• Unemployment around 4.5 while salaries growing
  at 5 real p. a.
• Poverty reduced by half in 10 years.

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What is happening now?

• From 1998, Chile has grown at a rate of 2.4 p.
  a., compared to 7.5 the previous 14 years.
• Unemployment is around 9 and if the emergency
  employment provided by the government is
  included, this figure goes to 12.
• Investment has declined to 21 of the GDP from
  29, and decreased by 6 in real terms
• All in all, the situation is not that serious
  because is fully explained by mismanagement.
  Fortunately this doesnt need to last for ever.

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Firms sustained on good foundations, sooner than
later find out the means to redress themselves
out of sometimes unsolvable situations. Chile is
a country which has nothing that prevents it to
recapture the avenue of prosperity. So let us
avoid the current skirmish the Chilean economy is
dealing with and let us raise our view in order
to focus ourselves on the challenges this country
has to overcome in the coming future.
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Meaningless Comparisons

• Isles are the most exposed environments to the
  international world, nonetheless, they have their
  own cooking, which many times turn to be very
  palatable and naturally including numerous
  international ingredients. Chile, geographically
  is very close to be an island and most of its
  political and economic history have been so. To
  look what our neighbors has been doing or how
  they are performing, conduces nowhere. Most of
  them are struggling to survive, while we have the
  conditions to become a developed country in a
  foreseeable horizon, so we should look to those
  who have succeed on this particular effort.

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Competitiveness is the name of the Game
We need to know how well (bad) placed is Chile in
the New Economy, that is the one of knowledge and
skill. Of a labor force of continue learning and
training skills. Of a permanent capacity of
innovation not necessary always with an invention
endowment. This has to be analyzed in a World
context, not in the Latin- American framework for
the reasons already mentioned. Let look at the
Singaporeans and alike.
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A Competitiveness Index
The Universidad del Desarrollo has studied how
fares Chile in a context of 42 countries with a
major participation on the world trade. The
parameters of comparison considered are Human
resources Capital Markets Technological
innovation capacity Globalization Digital Economy
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Human Resources Number of High School students
as of the population and of students in
science and technology as of high school
students.
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Capital Market Turnover and Capitalization
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Technical Innovation RD expenditures, patents
and Nº of scientists and engineers working on RD
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Globalization Direct Foreign investment,foreign
trade and avg. Custom duty
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Digital Economy Nº of computers, internet sites,
local call cost and telecommunications investments
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Global Index Weighted score of different
standardized indicators
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Global Index 2
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Global Index 3
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Global Index 4
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Where are the Chilean Challenges to recover the
avenue of success?
In terms of globalization, Chile is close to
among the top ten, to take a better advantage of
this position we should Improve our human
resources Improve our technological innovation
capacity Up grade our digital economy
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No matter how limited this indicators may be
considered, they represent facts and scores. From
this, there is one unavoidable conclusion to
draw The main challenge Chile has to overcome
is Education to succeed in the Global Economy.