Chile: A Bias for Hope

1
Chile A Bias for Hope

• Javier Santiso
• Chief Economist / Deputy Director
• OECD Development Centre

Latin American Economic Outlook
Conference Vittorio Corbo President, Central
Bank of Chile Paris ? 29th January 2007
2
Chile The rise of possibilism
I
Institutional anchoring
II
Conclusions
III
3
Latin America has experienced macroecomic
improvements
Inflation
250
200
150
()
100
50
0
1980
2005
1990
2000
Latin America
Total Emerging Markets
Source OECD Development Centre, 2006. Based on
IMF Statistics.
4
but Chiles macroeconomic management has been
exemplary The fiscal anchoring
Fiscal Balance by Country 2005
Average Debt ratios as Share of Exports 1996-2006
Debt as of Exports
Peru
Chile
Brazil
Mexico
Colombia
Venezuela
Argentina
Source OECD Development Centre, 2007. Based on
IMF, World Bank, National Data
of GDP
5
Chiles insertion in the international scene is
remarkable compared to other emerging economies
Trade openness in 2005
Brazil
Peru
Colombia
Argentina
Uruguay
Venezuela
Chile
Mexico
0
10
20
30
40
50
60
70
Source OECD Development Centre, 2007.
Based on UNCTAD and Intracen.
Source OECD Development Centre, 2007. Based on
Intracen and Index of Economic Freedom (Wall
Street Journal).
6
Gradualism and Continuism The example of
Pensions Reforms
Evolution of Pension Funds in Latin America (in
of GDP)
70
Return of Democracy
60
50

40
30
20
10
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Num. periods
ARGENTINA
BOLIVIA
COLOMBIA
COSTA RICA
CHILE
EL SALVADOR
MEXICO
PERU
URUGUAY
Source Javier Santiso, Latin Americas
Political Economy of the Possible Beyond Good
Revolutionaries and Free Marketeers. MIT Press.
2006. Based on the Inter-American Development Bank
7
Chile The rise of possibilism
I
Institutional anchoring
II
Conclusions
III
8
Institutional anchoring A key driver of
possibilism
Public Policies in Latin America
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
9
Institutional anchoring A key driver of
possibilism
Public Policies in Latin America
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
10
Institutional anchoring A key driver of
possibilism
Public Policies in Latin America
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
11
Chile The rise of possibilism
I
Institutional anchoring
II
Conclusions
III
12
A bias for hope The blessings of Democracy
Average
Source Javier Santiso, Latin Americas
Political Economy of the Possible Beyond Good
Revolutionaries and Free Marketeers. MIT Press.
Cambridge, Massachusetts, 2006 Based on the
Inter-American Development Bank
13
A bias for hope The blessings of Democracy
Source Mariano Tomassi. The Institutional
Foundations of Public Policy. Journal of the
Latin American Economic Association. Spring 2006.
14
A bias for hope The blessings of Democracy
Chile
Source IADB Politics of Policies Report, 2006
and UNDP, 2005
15
Chile A bias for hope

• Javier Santiso
• Chief Economist / Deputy Director
• OECD Development Centre

Latin American Economic Outlook
Conference Vittorio Corbo President, Central
Bank of Chile Paris ? 29th January 2007