Poverty in the Land of Miracles: A Study of Reforms and Poverty Alleviation Strategies in Chile

Abstract

This thesis aims to examine the relationship of poverty reduction to Chile's overarching political doctrines of neoliberalism (1975-1990) and neostructuralism (1990-2005). Owing to Chile's prototype status as a 'miracle economy', and its remarkable achievements in poverty reduction, the research seeks to gain insights into Chile's chief success factors and current'situation with respect to poverty. The study adopts both an historical and contemporary perspective to analyse the impacts of the major reforms on poverty and income distribution over the past 30 years and evaluates the Chile Solidario system as a modern case study. The key finding of this research is that the radical neoliberal and structural adjustment policies espoused by the 'Chicago Boys' had severe negative effects on the poor and middle class during Pinochet's dictatorship regime. The transition to democracy and adoption of neostructuralism has produced drastic reductions in poverty, attributed to the Concertacion governments' progrowth economic agenda, progressive social policies, and innovative institutional reforms. Post-dictatorship, the new faces of poverty in Chile are associated with social exclusion, isolation and vulnerability underpinned by persistent and high forms of inequality, a stratified social protection system and a dual labour market. Chile Solidario has presented an innovative and unique anti-poverty strategy by adopting a 'rights-based' approach to combat indigent poverty in Chile. It suffers, however, from methodological and fundamental shortcomings when it comes to dealing with chronic poverty and the empowerment of the poor. The newly emerging development model in Chile presents some contradictions in its 'growth with equity' principle. There are unresolved tensions between market social rights and democratic freedoms in this model that do not give top priority to equity and poverty reduction.