Friday, September 15, 2006

Is Chile weakening its ground ? (II)

When everything looks fine for strong economic performance there are worrisome indicators in Chilean economy. So, where is the real problem?.
a.- Negative expectations both from consumers and business man.(last week blog)
b.-Lack of a comprehensive focus about the real issues currently important for the future prospect of social mobility, quality of public services, better access to opportunities for all well educated person, decentralization , and transparency as a protection against corruption .It seems that it is all about lacking of economic democracy: which means to ensure every one a fair chance to take the proper benefit of the economic growth.
Chile has overcome the macroeconomic reforms quite successfully ,allowing the country a steady rate of economic growth which has reduced poverty (actual levels of 18%),but with a minor impact on unemployment (roughly 9%in the second quarter of this year ).Considering that copper prices has improve public resources availabilities ,it has also induced both better and higher expectations . Therefore ,Chile is living times for leaderships to set the direction to follow through .
The next question is : Is it just a government problem ?.I do not think so. The current Government has concentrated its effort to solve what it is urgent, including some unsolved issues from the past administration. In the mean time, it is still working on what it is important but without a specific plan yet. The resulting gap, push down expectations .Anyway, it is too soon to blame government.-
Some would argue that the government program is quite clear to set the directions which the country should move forward to, however there is still an important challenge to work out some of those ideas with the parliament .My point of view, is that there is no clear priorities at the politicians level(parliament) about what the important issues are for the country. They moves from one topics to another, without a sense of dealing with solutions to real necessities. Some of them are starting to preparing their campaigns for the next presidential election in the year 2009,such that it is harder to work out consensus needed to go deeper on further reforms.-
After 15 years of a renewed democracy and economic growth, Chile has achieved important assets and strength. It is a stable and prosperous environment for doing business, culturally homogenous , well educated middle class, but still with a lot of reminiscence from the past. Close to its 200 hundred year of independence ( 2010),it is still a centralized country with a regional management model , unsuitable and outdated for the present regional needs. This imply that business opportunities are lost , because there is no clear regional autonomy to make tough decisions. The Chilean State has made a strong effort to modernize itself, but there is still a long way to go before giving it a new profile, prone to deal with the solutions rather than to just analyze the problem.-
On foreign affairs, it looks like complex issues such as the energy resources supply and its implications for regional foreign policy, are not articulated within a strategy yet, by the same token , there is not a clear understanding of what the FTA with the US economy, meant for Chilean role in Latin America. Its expected leadership on issues concerning with free market economy and free trade expansion, has been elusive while strong winds supporting a more active role of the state in the economy moves around.-
So, Chile is facing the problems which arises along with growth, whereas other countries are dealing with the problems of lacking of economic growth. Therefore, there are new challenges which should be addressed ,but within the context of a broader view on foreign affairs .-

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