Chile

   

Policy Performance

#34

Economic Policies

#28
Despite a stable macroeconomic regime and generally prudent budget policy, Chile falls into the lower-middle ranks (rank 28) with regard to economic policies. Its score on this measure has declined by 0.2 points relative to 2014.

GDP growth has slipped slightly, but remains good at more than 2.5%. The economy is open and competitive, but depends strongly on commodity exports rather than industrial activity. Several recent rounds of labor-market reforms have increased the topics negotiable through collective bargaining and made work schedules more flexible.

The unemployment rate remained constant at about 7.2%, a high rate as compared to the last 10 years. The vast majority of workers earn low wages. Labor productivity is low. A controversial plan to integrate corporate-income and personal-income taxes was halted by the massive protests of October 2019, while pressure rose to increase taxes on the wealthiest 1%

An increase in tax revenues and decline in current expenditure resulted in lower deficits in 2018. Overall public debt levels are growing slowly, but remain low by international standards, in large part due to a fiscal rule that links government spending to estimated revenue trends.

Social Policies

#35
Rocked by mass popular demonstrations against unequal social conditions, Chile receives comparatively low rankings (rank 35) in the area of social policies. Its score in this area has improved by 0.2 points relative to 2014.

Widespread popular protests beginning in October 2019 prompted the government to propose a number of new reforms, including increases in basic pensions, a health-insurance expansion and the creation of municipal funds for vulnerable communities. The proposals failed to stop the protests, and many observers were calling for a more substantial overhaul of the basic economic and social model.

Educational reforms in recent years have led to subsidies for vulnerable students, funding increases and tuition-free status for most university students. The general income distribution is highly unequal. An influx of Venezuelan refugees has radically swollen the migrant population. Special visas for this group are available, but immigration rules have otherwise been tightened by executive degree.

Healthcare is split between private and public systems. The public system provides broad coverage, with varying – though improving – quality. Abortion laws have been loosened, but remain restrictive. Provision of preschool education is improving, but often fails to correspond to parents’ working hours, with wealthier families normally paying private nannies.

Environmental Policies

#31
With an ambitious but often market-focused environmental framework, Chile scores comparatively poorly (rank 31) with regard to environmental policies. However, its score in this area has improved by 0.9 points relative to 2014.

Environmental institutions have been modernized in recent years, with oversight bodies becoming increasingly effective. However, policy is oriented toward international market requirements rather than toward sustainability. While industrial interests have considerable influence, particularly in the fields of water use and forestry, courts have occasionally halted development on environmental grounds.

A green tax has been in place in the energy sector since 2017. A bill containing an emissions-reduction and climate-governance system has been in the works for some time, and was expected to reach parliament in 2020. The bill foresees carbon neutrality by 2050.

The capital city of Santiago has implemented a number of initiatives aimed at diminishing air pollution and promoting sustainable public transport. The country signed the Paris Agreement in 2016. It was slated to host the 2019 COP25 UN Climate Conference, but this was canceled due to the political crisis.

Democracy

#28

Quality of Democracy

#28
With generally stable institutions showing increasing strain, Chile falls into the lower-middle ranks (rank 28) with regard to quality of democracy. Its score on this measure has fallen by 0.1 point since 2014.

Massive protests during the review period drew attention to social inequalities. The government declared a one-week curfew in response, and reports indicated that state forces, especially the police, had committed severe human-rights abuses. Ethnic minorities are have also been subject to discrimination and human-rights abuses.

A new electoral law, applied in 2017 for the first time, has expanded both legislative houses, changed the proportional-representation model and introduced gender quotas for candidate lists. Same-sex civil unions have been accepted, but same-sex marriages have not been recognized. Gender and ethnic discrimination remain concerns. Courts are strong and independent.

New anti-corruption measures have been implemented in response to political-party funding scandals, through penalties for such infractions have been mild. There are no regulations mandating transparency for potential conflicts of interests, although links between political and economic elites reinforce existing patterns of privilege.

Governance

#30

Executive Capacity

#20
With a modernizing state struggling to manage popular discontent, Chile falls into the middle ranks (rank 20) with regard to executive capacity. Its score in this area has declined by 0.3 points relative to 2014.

Specialist units in ministries engage in strategic planning. The government office has sufficient capacities to evaluate line-ministry proposals, and collaborates in their development. Informal coordination plays an important role. Government communication deteriorated during the review period, with presidential statements contributing to and accelerating the social crisis.

RIAs regularly address fiscal impact, but not environmental or social issues. Ex post evaluations are occasionally carried out by external consultants. The government’s frequent consultation with civil society is skewed toward economic interests, which have considerable influence over the development of some regulations. However, agencies subsequently tend to enforce regulations without bias.

The 2019 mass protests forced the government to adjust its program and policy objectives significantly. Education and primary healthcare standards in poor regions are improving, but a huge gap remains to be closed. An ongoing decentralization program giving greater power and funding flexibility to newly elected regional governors is intended to address these and other structural weaknesses.

Executive Accountability

#35
With a mixed pattern of strengths and weaknesses, Chile scores relatively poorly (rank 35) with regard to executive accountability. Its score in this area has improved by 0.3 points relative to 2014.

Legislators have modest resources, but good formal executive-oversight powers. However, under Chile’s non-parliamentary system, congressional committees’ institutional degree of control is rather low. A Transparency Council oversees public-sector compliance with data-privacy laws, but does not monitor private-sector compliance.

Low education levels combined with a dependence on TV news means that a large share of the population has a poor understanding of public policy. The oligopolistic media distorts policy discussions. During the mass protests, numerous newspapers published misinformation on allegedly involved actors, with some subsequently apologizing following a public prosecutor’s intervention.

Presidential candidates’ platforms are more relevant than party agendas, and party leaders tend to control candidate selection. Numerous think tanks are directly connected to economic interest groups. These groups’ policy proposals tend to be plausible but narrowly focused. The civil society sector has a wide range of capabilities.
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