1 Cristian Larroulet Executive Director Libertad y Desarrollo Beijing, September 2005 Chile: A case of sustainable development

11

Cristian Larroulet Cristian Larroulet Executive Director Executive Director

Libertad y DesarrolloLibertad y Desarrollo

Beijing, September 2005Beijing, September 2005

Chile: A case Chile: A case of sustainable of sustainable developmentdevelopment

22

IndexIndex

Chile’s Economic Conditions before the Reforms

Main Economic and Social Reforms

Main Results Main Results

New ChallengesNew Challenges

33

Chile’s economic conditions Chile’s economic conditions

before the reformsbefore the reforms

A closed and highly intervened economyA closed and highly intervened economy

1960-19731960-1973

Low Growth (%)Low Growth (%) 3,43,4

High Inflation (%)High Inflation (%) 48,048,0

Fiscal Deficit (% Fiscal Deficit (% GDP)GDP) 6,06,0

Tax on TradeTax on Trade 90,0 (1973)90,0 (1973)

Source: Libertad y Desarrollo. Source: Libertad y Desarrollo.

44

Free market economy Free market economy

Sound macroeconomic policies Sound macroeconomic policies

Free trade Free trade

Microeconomic reforms Microeconomic reforms - social security- social security- privatization- privatization- others- others

Environmental policies Environmental policies - Standards and “ whoever contaminates - Standards and “ whoever contaminates

must pay”must pay”

Social policiesSocial policies- Focus on extreme poverty groups- Focus on extreme poverty groups

Main economic and social reformsMain economic and social reforms

55

Central GovernmentCentral GovernmentPrimary Fiscal Expenditures (% GDP)Primary Fiscal Expenditures (% GDP)

10,0

15,0

20,0

25,0

30,0

35,0

40,0

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

Source: Libertad y Desarrollo.Source: Libertad y Desarrollo.

66

0

50

100

150

200

250

300

350

400

450

500

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Inflation rateInflation rate( % December to December)( % December to December)

Source: Central Bank of Chile.Source: Central Bank of Chile.

77

74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04

0%0%

10%10%

20%20%

30%30%

40%40%

50%50%

60%60%

70%70%

80%80%

90%90%

100%100%Taxes on TradeTaxes on Trade

Source: Libertad y Desarrollo.Source: Libertad y Desarrollo.

88

High Rate of Growth High Rate of Growth

Diversification of Exports Diversification of Exports

Reduction in Poverty Reduction in Poverty

Better Health Better Health

Higher Coverage in Education Higher Coverage in Education

Less Contamination Less Contamination

Main ResultsMain Results

99

Growth Factors Growth Factors ( % contribution to growth)( % contribution to growth)


1,4 2,02,8

1,01,0

1,8

0,7

2,3

3,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

1960-1973 1990-2003 1985-1997

Capital Employment TPF

3,13,1

5,35,3

7,67,6

1010

Total Exports 1970 US$ 1.112 millionsTotal Exports 2004 US$ 32.025 millions

85,5%

11,5%

3,0%

51,4%

36,8%

7,4%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1970 2004

Mining Manufacturing Agricultural

Diversification of ExportsDiversification of ExportsExport Products (% of total exports)Export Products (% of total exports)

Source: Central Bank of Chile. Libertad y Desarrollo. Source: Central Bank of Chile. Libertad y Desarrollo.

1111

Evolution of Extreme PovertyEvolution of Extreme PovertyAs % of populationAs % of population

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

1970 1982 1992 1994 1996 1998 2000 2003


1212

Health IndicatorsHealth Indicators

1970 1980 1990 1995 2000 2002

Life expectancy at birth (in years) 62 67 72 73 75 76(1)

Infant mortality rate (per 1.000 live births) 79 32 16 12 8,9 7,8

Undernourished( % of children being controlled under six years old )

15,5 11,5 7,4 8,8 7,6 7,7

Source: National Statistic Institute.Source: National Statistic Institute. Notes: (1) average of 2000-2005Notes: (1) average of 2000-2005

1313

EducationEducation1970 1990 1994 1996 2000 2003

Average number of years in school

4,5 9,0 9,2 9,5 9,8 10,1

Years in school of the 20% low income population

n.a. 7,4 7,3 7,3 7,8 9,9

% of children in high poverty without access to primary education

43 4,5 3,8 3,5 2,3 n.a

% of population with access to secondary education

40 80 84 86 90 92,6

% of 20% of low income with access to secondary education

n.a 73 73 75 82 87,5

Source: Ministry of Source: Ministry of Education. Education.

1414

Evolution of sources of contaminating emissions in Santiago’s

Area

00

55

1010

1515

2020

2525

3030

19901990 19911991 19921992 19931993 19941994 19951995 19961996 19971997 19981998 19991999

Ton

s/ye

ars

Ton

s/ye

ars

00

10001000

20002000

30003000

40004000

50005000

60006000

Nu

mb

er s

ourc

es

Nu

mb

er s

ourc

es

Number of sourcesNumber of sources

EmissionsEmissions


1515

New challengesNew challenges

Free Trade Agreements Free Trade Agreements

Quality in Education Quality in Education

Innovation, Research and Development Innovation, Research and Development

Better Environmental Policies Better Environmental Policies

1616

Chilean Trade AgreementsChilean Trade Agreements(% of Imports 2004)(% of Imports 2004)

Mexico (2,5%)Mexico (2,5%)

Canada (1,4%)Canada (1,4%)

MERCOSUR (28,5%)MERCOSUR (28,5%)

Bolivia (0,2%)Bolivia (0,2%)

Colombia (1,1%)Colombia (1,1%)

Ecuador (0,6%)Ecuador (0,6%)

Peru (2,8%)Peru (2,8%)

Venezuela (0,7%)Venezuela (0,7%)

UE (14,4%)UE (14,4%)

United States United States

(13,5%)(13,5%)

Korea (2,8 %)Korea (2,8 %)

ApprovedApproved In StudyIn Study India (0,4 %)India (0,4 %)

China (7,4 %)China (7,4 %)

Japan (3,2 %)Japan (3,2 %)

N. Zealand (0,1 N. Zealand (0,1

%)%)

Singapore (0,1 Singapore (0,1

%)%)


1717

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100

200

300

400

500

600

700

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TIMSS 2003TIMSS 2003Trends in Mathematics AchievementTrends in Mathematics Achievement

(Average)(Average)

Source : Full Reports TIMSS 2003Source : Full Reports TIMSS 2003

1818

Source: Human Capital Report (2003).Source: Human Capital Report (2003).

1980-1989 2000

Brazil 0,2 0,6

ChileChile 0,30,3 1,01,0Korea 1,3 70,1Hungry 10,4 3,6Span 2,2 6,8Ireland 8,8 32,4Portugal 0,4 1,1Finland 37,1 119,4New Zealand 15,2 28,0

Patents Granted in USAPatents Granted in USA(Per million inhabitants )(Per million inhabitants )

Documents

1 Cristian Larroulet Executive Director Libertad y Desarrollo Beijing, September 2005 Chile: A case of sustainable development