Key Challenges

Trailing behind industrialized nations
Although Chile has undergone a far-reaching and successful modernization process in recent years, it still faces serious challenges. Internationally, for example, it remains in a number of respects behind many industrialized countries. Domestically, there remains a very significant distance between the privileged rich and the marginalized poor; a core demand of the massive social protests that arose in 2019 was to close this gap. The pandemic forced the government to drastically adapt its already modified agenda. There is an urgent need for structural reforms in the education, health and social protection areas, and especially in pension systems, not only to catch up with other OECD member states, but also to preserve social peace and ensure a stable economic environment.
Long-term challenges:
Lack of long-term
strategic capacities;
fragile middle class
Chile has been facing the same long-term challenges for a number of years. Political and strategic planning are undermined by a lack of state capacities and instruments that would ensure that policymaking adopts a medium- to long-term perspective, especially in the case of social, economic and ethnic issues. Chile is one of the most centralized OECD countries despite its economic, geographic and ethnic diversity; this fact hampers efficiency. Over the last decade, macroeconomic performance has been positive and stable, and poverty has been significantly reduced, but large socioeconomic disparities remain. These permeate the whole of the social system, but the negative impact is felt particularly within the education, healthcare and pension systems. The lower-middle class is highly indebted and under strong social pressure to consume. Many middle-income families struggle to maintain their living standards; if one wage earner loses a job or falls ill, families almost immediately have to significantly lower their living standard. The enormous gap between the quality of the poorly funded public educational system (where per student expenditure tends to be less than half the OECD average) and its expensive private counterpart renders the elimination of structural poverty and socioeconomic disparities much more difficult. All of these structural problems were further highlighted and, in some cases, exacerbated by the impact of the COVID-19 pandemic. A new constitution that extends (social and economic) rights and redefines the relationship between state and market might be the right step to overcome these structural deficits, but there is no guarantee that it will be successful in doing so. Regarding environmental protection, a central challenge will be the management of water stress. At present, most of the water basins and water sources are overexploited or at the limit of their capacities. The burgeoning water crisis will have a major impact not only on the environment as such, but also on the economy and general living conditions. Chile is the only country that explicitly enshrines private ownership of water rights.
Short- and medium-term challenges:
Difficult job for new
president; consensus
key in changing political
In the general election of November 2021, Gabriel Boric from the left-progressive alliance Broad Front (Frente Amplio), founded in 2017, was elected president. Taking office at the age of 36, he is the youngest president in Chile’s history. Due to the high number of political parties of recent creation that form Boric’s coalition, it might be difficult for him to generate cohesion within his cabinet, and thus to coordinate a well-functioning government. He will also have to search for constructive dialogue with the Congress. Any reform initiative will have to pass the Chamber of Deputies and the Senate, in which Boric lacks a clear majority; both houses are divided into two balanced blocs. The new government is expected to consider a large boost to social spending, an increase in taxes on high-income earners and the mining sector, and the introduction of carbon taxes. Furthermore, the decentralization agenda and the reform of the health and pension systems will be essential topics for the new government. Thus, the ability to reach consensus will be decisive in order to implement the ambitious government program in a context in which the configuration of the traditional political parties is changing. At the same time, the high expectations caused by this atypical and highly polarized presidential election, the prospect of a new constitution and the (macro-)economic conditions left by the COVID-19 pandemic have placed vast amounts of pressure on national politics, and especially on the new government. Restoring credibility and trust in political and public institutions will be crucial to ensure successful governance in the short- and medium-term.
Constitutional uncertainty remains
Boric (together with the Congress) will also be responsible for organizing the referendum on the replacement of the constitution. If the new constitutional text is accepted in the mandatory plebiscite, Boric will also have to contribute – along with the legislature – to the implementation of those (legal, institutional, political and economic) changes stipulated by the new constitution. He may thus be the last president acting under the so-called Pinochet constitution.
The president-elect’s Programmatic Proposal (Propuesta Programática):
Boric Presidente,, last accessed: 13 January 2022.

On the water crisis
Universidad de Chile – Centro de Economía de los Recursos Naturales y el Medio Ambiente (CENRE), “Prioridad para consumo humano: El único mínimo común de los constituyentes en torno al agua”, 21 May 2021,, last accessed: 13 January 2022.

Pontificia Universidad Católica de Chile, “Estudio identifica a Chile como el único país con expresa propiedad privada de derechos de agua”, 30 March 2021,, last accessed: 13 January 2022.

Party Polarization

Legacy of military
regime persists
Since the return of democracy, political polarization in Chile has been strongly characterized by the legacy of Augusto Pinochet’s military regime: opponents vs. supporters, or critics vs. apologists. The initial binominal electoral system, which was modified in 2015, strengthened the tendency to build two different competing ideological alliances or blocks for election campaigns and government or parliamentary work. Therefore, party polarization as such has not been a major obstacle for policymaking in the past. In general, the search for consensus rather than conflict has prevailed among political actors (and voters) since the transition to democracy.
Change in political landscape
However, the political-party landscape has changed substantially since the 2017 presidential elections, especially within the traditional center-left alliance of the Nueva Mayoría and the Frente Amplio alliance, the latter of which has emerged as an alternative to the traditional center-left coalition. The primaries of 2021, by which the different coalitions selected their presidential candidates, and the later results of the presidential and parliamentary elections consolidated this tendency. For instance, for the first time, neither of the two final candidates making it to the presidential runoff election of 2021 belonged to the traditional ideological alliances. As the result of this election, the relatively new Broad Front (Frente Amplio) will also provide the next president.
Easing party
Although there was a significant increase in party polarization due to the social crisis of 2019, parliament finally reached an agreement on the referendum through which the country voted to establish a new constitution. With the advent of the COVID-19 health crisis, the growing party polarization has rather eased slightly, considering that cross-cutting agreements were reached relatively quickly between the government and the opposition regarding the public health and economic measures implemented to date. One of the most discussed and controversial issues during the period under review was the early withdrawal of pension savings.
Declining trust in politicians
Between 2007 and 2018 (latest survey), party polarization has been slightly lower than the OECD average, as the SGI dataset on ideological polarization in party systems highlights. At the same time, trust in politicians has shown a constant decline since 2011, and is also lower than the OECD average. (Score: 7)
CADEM, “Plaza Pública N° 360 – 7 de Diciembre”, 7 December 2020,, last accessed: 13 January 2022.
Back to Top