Chile

With social and public health pressures undermining its record of budget prudence, Chile falls into the lower-middle ranks (rank 28) with regard to economic policies. Its score on this measure has declined by 0.3 points relative to 2014.

The pandemic caused a severe recession in 2020, with GDP falling by 5.8%. However, growth returned to more than 10% in 2021. Similarly, the unemployment rate bounced to nearly 13% in 2020, but returned to about 7.5% by period’s end. The rate of informal employment was nearly 30% as the pandemic began.

Government policies during the pandemic allowed employers to stop paying workers while still covering social-security contributions, and made teleworking easier. The vast majority of workers earn low wages, and labor productivity is low. A new tax will force digital services providers to pay VAT.

Budget discipline had come under pressure due to commodity-price declines even before the pandemic. Following the social disturbances of 2019, the government tapped pension and stabilization funds for current spending. Overall debt remains low by international standards.

Still reeling from massive protests targeting flaws in the social system, Chile receives comparatively low rankings (rank 34) in the area of social policies. Its score in this area has improved by 0.2 points relative to 2014.

Bolstered by new funding, the healthcare system functioned reasonably well through the pandemic, despite critical peaks. Vaccination rates are high. Healthcare contribution rates are unequal, as maternity costs are borne solely by women.

Mass protests in 2019 and afterward centered on injustices in the education, health and pension systems. Far-reaching reform of the ailing pension system is now being discussed. Poor students increasingly receive higher-education subsidies. The pandemic exposed significant educational inequities, as public schools were often unable to implement online teaching successfully.

A steep rise in immigration in recent years has led to social tensions in the north. The number of terrorist attacks with alleged ethnic motivation has increased significantly in the south, leading to declaration of a state of emergency in 2021. Reports on the 2019 social tensions have held the government responsible for human rights violations.

After considerable strides in recent years, Chile falls into the middle ranks (rank 22) with regard to environmental policies. 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 often 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. The bill foresees carbon neutrality by 2050.

The capital city, Santiago, has implemented a number of initiatives aimed at diminishing air pollution and promoting sustainable public transport. The country implements and finances South-South and triangular environmental cooperation projects, but these are typically small compared to other OECD-member projects.

With institutions being reexamined following historic protests, Chile falls into the lower-middle ranks (rank 29) with regard to quality of democracy. Its score on this measure has fallen by 0.1 point since 2014.

Massive protests in 2019 culminated in an agreement between party elites to launch a new constitutional process. In a plebiscite, a majority of voters supported the creation of a constitutional convention, followed by a second plebiscite to approve that entity’s product. Gender equity provisions ensured that the convention would have a roughly equal balance of men and women.

Reports on police activity during the protests indicate that law enforcement figures repeatedly violated human rights. Ethnic minorities have been subject to discrimination and human-rights abuses. Same-sex marriages and adoptions have been legalized.

A recently enacted campaign finance law has significantly improved transparency. A dispute over judicial supremacy has been ongoing between the Supreme Court and the Constitutional Tribunal. There are no regulations mandating transparency with regard to politicians’ conflicts of interest. A number of significant corruption scandals have emerged in recent years.

With a modernizing state struggling to manage popular discontent, Chile falls into the middle ranks (rank 22) with regard to executive capacity. Its score in this area has declined by 0.2 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 was frequently incoherent or inconsistent during the October 2019 protests, and during the early phases of the pandemic in 2020.

RIAs regularly address fiscal impact, but not environmental or social issues. Ex post evaluation requirements have recently been strengthened. 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 Piñera administration fulfilled few of its original goals due to the massive protests followed by the pandemic. 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.

Showing 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 0.4 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 bill that would establish a data-protection agency has been approved by the Senate, but had not been enacted by the review period’s end.

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. The growing importance of social networks has made disinformation and manipulation campaigns more common.

Presidential candidates’ platforms are more relevant than party agendas, and party leaders tend to control candidate selection. The new president’s left-wing Frente Amplio coalition is less centralized than traditional parties. Think tanks linked to economic interest produce policy proposals that tend to be plausible but narrowly focused. The civil society sector has a wide range of capabilities.