The document seeks to explore Chile’s political economy, emphasizing on income distribution and the country’s growth rate. This being said, the author compares Chile’s performance with that of other countries in terms of government size, income distribution, and per capita GDP. Consequently, the document offers a diagnosis on the dynamics of income distribution and growth, thereby analyzing Chile’s political leadership, policy-making process and quality of its institutions and policies.
The document is organized as follows. After a brief introduction, section two analyzes the relationship between government size, income distribution and economic growth in Chile. Meanwhile, chapter three introduces a political-economy model for analyzing alternative scenarios of income distribution, government spending and taxation in the country. For its part, chapter four presents a model for the role of political leadership, the policy-making process and the quality of institutions in shaping the dynamics of equity and growth. Section five applies a dynamic model to assess Chile’s policy-making process. Finally, section six suggests key reforms to support economic growth and equity in Chile, whereas section seven delivers some concluding arguments.
To conclude, the author claims that:
- government size appears to be smaller in Chile than in most countries at similar development levels
- Chile possesses high quality levels of leadership, institutions, and policies, which may help the country towards improving income distribution and increasing economic growth
- in order to attain growth and improve equity, Chile must promote stronger voter representation, government efficiency and accountability by means of further political reforms
The document is available in English
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