In Pursuit of “Growth with Equity”: The Limits of Chile's Free-Market Social Reforms

Abstract

The economic and social strategy developed by the democratic governments in Chile since 1990 has been based on the premise that free-market policies promoting growth and economic stability must continue, but should be combined with social policies designed to promote greater equality. This new set of policies produced quick and positive results in the context of strong economic growth. The reduction of poverty was its crowning achievement. However, not all the Concertación's redistributive efforts have enjoyed the same level of success. Inequalities in income distribution are again increasing. Significant segments of society, such as subsistence farmers, rural migrants to cities, women and youth who lack vocational training—as well as an important segment of the middle class that had been impoverished during the military regime—are being systematically marginalized from the benefits of economic growth and social policy. The fundamental problems of current Chilean social policy are rooted in the privatization of social sectors under the military government and the resulting dual model of social welfare.