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A change in priorities for Chile’s Pinera

Marketplace Staff Mar 10, 2010

A change in priorities for Chile’s Pinera

Marketplace Staff Mar 10, 2010


Kai Ryssdal: The difficult job of rebuilding Chile after the earthquake a couple of weeks ago is about to fall to a guy whose first day on the job is tomorrow. President-elect Sebastian Pinera takes over from Michelle Bachelet in Santiago with a set of priorities that is somewhat different now than when he was elected in January. We have called Chilean economist Sebastian Edwards at UCLA to talk about how things have changed for the president-elect. Professor Edwards, welcome to the program.

Sebastian Edwards: Great to be with you.

Ryssdal: Mr. Pinera was elected on a growth platform, I think it’s fair to say — higher GDP growth, a million jobs in the Chilean economy. How much is that going to be affected by the earthquake?

EDWARDS: Well, there will be some effects. Certainly when you have major breakdown of infrastructure, as everyone that has seen television coverage of the earthquake has seen, it’s a problem. In particular, there’s been pretty bad floorboards and highways, and Chile’s a very much an export-orientated economy. But I’m confident that in a rather short period of time, it will start moving forward, the economy.

Ryssdal: You know, Chile has been, for 20 years or so, quite a success story economically in Latin America, but the way I read things, this earthquake has shown Chileans in a slightly different light to the rest of the world. There is more poverty. There are two Chiles, as I heard the other day. How will he try to deal with that as he moves his government forward?

EDWARDS: Well, I think that you’re right, Kai, but let me say a couple of things. First, the two Chiles of course is something that may be new to an international audience, but it has very much been at the forefront of the political discussion in Chile. So it’s not news in the country. Politicians, economists, business people and others know that that is the case, and indeed, there is going to be I think greater effort to try to bridge the gap between the poor and the rich. That will require significant reform, especially in the educational area. And I think that paradoxically maybe the earthquake is going to probably help the new government to move in that direction.

Ryssdal: Will it help as Mr. Pinera tries to align Chile with more developed and advanced economies than with some of the developing economies down in Latin America?

EDWARDS: Well, it may. This is one of the points that some of us, including myself, have been trying to argue when we talk to Chilean audiences. Chile, as you may know, has been accepted into the OECD, joined that rich countries economics club. And the point that we’ve made is that it’s high time for Chile to start changing the benchmark. For a long time, they’ve been very proud, and rightly so, that Chile has the best performance in Latin America. But frankly that is not a very demanding comparison group. So they should really start comparing themselves to the New Zealands and Australians of the world, advanced commodities exporting countries, and they may start doing that and that will help them move forward I think.

Ryssdal: Do you think the rest of the world is ready for that comparison that Chile might make?

EDWARDS: I think that the rest of the world will look at that with some sympathy. Now there are political problems. I mean you cannot get out of your neighborhood. And from a political international point of view, there is this sort of dilemma. Do they want to stay in Latin America and be the leaders of that sort of second division, if we use a sports metaphor, or do they want to move into the premier league-ship and start competing with advanced countries. And I think the latter is what they ought to do. The rest of the world will look at that effort. The Latin American countries will, of course, think that they are becoming too arrogant but success requires some degree of arrogance I guess.

Ryssdal: Sebastian Edwards at the Anderson School at UCLA. Professor, thank you so much for your time.

EDWARDS: Thank you. It was great, Kai.

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