The new challenges that the country faces

Chile sets its sights on the Bicentenary

President Sebastián Piñera’s new government begins a new stage marked by the challenges of reconstruction after the powerful earthquake that shook the country on 27 February 2010.

Monday, June 01, 2009  

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11 March 2010 marked a milestone in Chilean contemporary history. After 20 years and four Concertación governments, the center-right led by President Sebastián Piñera Echenique came to power, thus marking the end of one era and the beginning of another.

 

The successful transition

 

The governments of Patricio Aylwin, Eduardo Frei Ruiz-Tagle, Ricardo Lagos and Michelle Bachelet, between 1990 and 2010, were marked by the transition to democracy, economic growth, trade liberalization, significant progress in Chileans’ quality of life, reduced poverty, and sustained progress toward development.

 

Thus, while 45% of Chileans lived in poverty in the late 1980s, by 2010 that amount had been reduced to 15%. Over the last 20 years health spending per inhabitant increased by an average of 7% per year.  Life expectancy also increased from 72 years in 1985 - 1990 to 78.6 years now, the second highest in Latin America after Costa Rica and 35th in the world according to UN data.

 

In the early 1990s Chilean middle-class families had a real income of almost half of what they receive in 2010. Currently, Chile has a nominal per capital GDP of US$ 8,853 according to IMF data, the highest in the region.

 

There has also been significant progress in the economic field. At the end of the military government Chile’s inflation was 19%, while over the last 10 years it has averaged barely 3.3%. Today the country also has diverse Economic Complementation Agreements (ECA), free trade agreements (FTA) and strategic association agreements with a vast part of the world, including the United States, China, Japan, South  Korea, Mexico, Australia, Canada, Peru, and the European Union. In fact, the 2010 Economic Freedom Index ranked Chile as the 10th most open economy in the world.

The progress made by the governments of the Concertación culminated in Chile’s admission into the Organization for Economic Development and Cooperation (OECD), a select group of developed nations, in December 2009.

Even so, tasks were left pending that were not totally resolved over the last 20 years, especially with regard to inequalities in the distribution of income and the quality of public education, two major challenges that the new ruling coalition will have to deal with.

The challenges of reconstruction

After four Concertación governments Chile has begun a new stage with the Coalición por el Cambio in the government, led by President Sebastian Piñera Echenique. This change in the ruling coalition, or alternation in power, is a sign of the maturity and solidity of Chilean democracy, which has completed two decades of continuity.

However, an emergency marked Piñera’s inauguration: the earthquake measuring 8.8 on the Richter scale that hit the central-southern part of the country on 27 February 2010, barely 12 days before the transfer of power. For the same reason, the incoming government rushed to first deal with the victims and to find the people who were missing, followed by dedicating itself to reconstruction in the areas hardest hit by the earthquake, considered the fifth-most powerful on record, and the tsunami that followed. With regard to the government program, President Piñera stated that it will have to be reformulated to adapt to the new post-earthquake scenario.

The government has calculated that the disaster caused more than 450 victims, destroyed 70,000 homes, and caused US$ 30 billion in losses, though a good part of this is insured. However, the country has everything it needs to successfully face this stage. In fact, the country’s international reserves alone total US$ 26 billion. In addition, Chile has open lines of credit with the Inter-American Development Bank (IDB) and the World Bank (WB), the main lenders in the region.

New goals

Despite the difficulties, the new administration seeks to give the country a new boost. For example, the government program’s target is to get the Chilean economy to grow at an average rate of 6% over the course of this four-year term, in addition to creating an average of 200,000 jobs per year, increasing investment from 21% of GDP (2009) to 28% of GDP in 2014 and defeating indigence by 2014.

With regard to education, the government hopes to increase English education in schools, outfit all classrooms with computers, data projectors and Internet; and in particular improve the quality of public education. In addition, the new authorities have said that they will place special emphasis on increasing levels of security, reducing crime and improving the public health system.

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