Paper Title :Public and Private Sectors in Chile: Good Economic Performance and Social Unrest (2000-2015)
Author :Enrique Vasquez
Article Citation :Enrique Vasquez ,
(2017 ) " Public and Private Sectors in Chile: Good Economic Performance and Social Unrest (2000-2015) " ,
International Journal of Management and Applied Science (IJMAS) ,
pp. 20-23,
Volume-3,Issue-11
Abstract : 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
Type : Research paper
Published : Volume-3,Issue-11
DOIONLINE NO - IJMAS-IRAJ-DOIONLINE-10224
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Copyright: © Institute of Research and Journals
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Published on 2018-01-29 |
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