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Chile
Index
Twentieth-century Chile has had an extensive system of
staterun welfare programs, including those in the social
security,
health, and education areas. From the mid-1970s to the
early 1990s,
spending on all these programs ranged from as little as 19
percent
to as much as 26 percent of the gross domestic product
(
GDP--see Glossary),
proportions that were similar to those spent in
1975 by
countries belonging to the Organisation for Economic
Co-operation
and Development (
OECD--see
Glossary). In the same period,
about
two-thirds of the national labor force was covered by
old-age
pensions and other benefits. In addition, there were
universal
access to curative health care and programs of preventive
care for
all expectant mothers, infants, and children less than six
years of
age who did not have recourse to alternative health care.
In
addition, the state-run educational system, which was open
to every
child at primary and secondary levels but had admissions
standards
for higher education, was free of charge, except for
nominal
matriculation fees at all levels
(see Education
, this
ch.). The
state also offered low-income housing programs at heavily
subsidized rates.
Spending for these various programs increasingly
outpaced
revenues, as the decline in the mortality rate enhanced
the
dependency ratio and as the programs expanded. In
addition, there
were numerous programs, especially in the social security
area,
that provided very unequal benefits. Consequently, the
military
government redesigned the most important welfare
institutions in
ways that were consistent with its market-driven ideology,
and
social spending was scaled down to about 17 percent of GDP
by 1989.
By the end of its first year in office, the Aylwin
government
increased social spending by more than US$1.5 billion over
the
Pinochet government's budget. The revenue came from a 4
percent
increase in the higher tax rate on enterprises, from 11
percent to
15 percent; a 2 percent hike in the national value-added
tax (
VAT--see Glossary) to 18
percent; and other sources. The
objective of
the Aylwin government was to enhance the purchasing power
of
minimum pensions, to increase the quality of educational
and health
services and to provide greater assistance in the housing
field.
The new programs were intended to have a positive effect
on the
distribution of income. The military government's reforms
had
privatized or decentralized the administration of many
welfare and
social-assistance institutions. The Aylwin government did
not
reverse these privatizations, although it attempted to
increase the
quality and funding of the institutions that remained in
the public
sector. It also decided not to recentralize the
administration of
the public portions of welfare, educational, and
social-assistance
institutions that had been placed in the hands of local or
regional
governments. The Aylwin administration was committed to
strengthening local and regional governments as part of a
broad
effort to enhance the decentralization of authority.
However, in
contrast to the military regime's decentralization
projects that
organized local and regional governments along lines of
authoritarianism and
corporatism (see
Glossary), new
constitutional
and legal reforms adopted in 1992 introduced democracy to
these
levels of government.
Through the combination of many efforts in the social
field
since the 1930s, Chile has a relatively favorable overall
human development index (
HDI--see Glossary), as
measured by the
United
Nations Development Programme (UNDP). The UNDP's Human
Development Report, 1993 shows Chile ranking
thirty-sixth among
the world's 160 countries for this indicator, eighth among
all
developing countries, and second only to Uruguay among all
Spanishspeaking Latin American countries.
Data as of March 1994
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