Chile
Aug 16th 2007 SANTIAGO
From The Economist print edition
A country that pioneered reform comes close to abolishing poverty
ON ONE of the coldest days in an unusually cold southern-hemisphere winter, Sara Reyes's house is warm. Ms Reyes is sewing the clothes that for the past 18 months have allowed her to support her two children and a nephew, and sometimes to employ a sister and two neighbours. Previously jobless, she obtained her first sewing machine—she now has three—from Chile Solidario, a government programme launched in 2002 to tackle extreme poverty.
Her neighbourhood was once one of the biggest and poorest shanty towns in Santiago, Chile's capital. Over the past ten years, the roads have been paved and piped water installed. Most people now have fridges and telephones and some have cars. “Defeating material poverty is a mission well on the way to being fulfilled in Chile,” says Benito Baranda of Hogar de Cristo, a charity. Its shelters now cater less for the destitute than for people with drug or psychiatric problems. Around 500,000 people still suffer extreme poverty, but that number is down by a third since 2003.
Poverty has fallen further, faster, in Chile than anywhere else in Latin America (see chart). Sustained economic growth and job creation since the mid-1980s are the main explanation, though it helps that poorer Chileans are having fewer children than in the past. In recent years public policies, such as Chile Solidario, have played a bigger role. In the 1990s poverty dropped by half a percentage point for each point of economic growth, but now it falls by one-and-a-half points, according to Clarisa Hardy, the planning minister.
Chile Solidario aims to help the poorest support themselves, by ensuring they take up various social benefits and keep their children healthy and at school, and by offering training and a grant to set up a small business. It is too soon to tell whether it will be a long-term success: the first of 250,000 very poor families enrolled in the scheme are only just graduating from it. Even so, Chile has a chance of all but abolishing poverty in the next few years.
Some Chileans argue that the national poverty line, of $90 a month, is set too low. In Santiago this buys just four bus fares a day. Income distribution in Chile is becoming slightly less unequal. The richest tenth of the population still take 38.6% of national income, though this is slightly less than they take in the United States. Using the relative yardstick favoured in many European countries, 27% of Chileans would be poor, according to Juan Carlos Feres of the UN Economic Commission for Latin America and the Caribbean.
The fact that alternative ways of measuring poverty are now being discussed is a sign of how far Chile has come in the past two decades. It is also an indication of the tasks that still lie ahead in creating a middle-class society.
Aug 16th 2007 SANTIAGO
From The Economist print edition
A country that pioneered reform comes close to abolishing poverty
ON ONE of the coldest days in an unusually cold southern-hemisphere winter, Sara Reyes's house is warm. Ms Reyes is sewing the clothes that for the past 18 months have allowed her to support her two children and a nephew, and sometimes to employ a sister and two neighbours. Previously jobless, she obtained her first sewing machine—she now has three—from Chile Solidario, a government programme launched in 2002 to tackle extreme poverty.
Her neighbourhood was once one of the biggest and poorest shanty towns in Santiago, Chile's capital. Over the past ten years, the roads have been paved and piped water installed. Most people now have fridges and telephones and some have cars. “Defeating material poverty is a mission well on the way to being fulfilled in Chile,” says Benito Baranda of Hogar de Cristo, a charity. Its shelters now cater less for the destitute than for people with drug or psychiatric problems. Around 500,000 people still suffer extreme poverty, but that number is down by a third since 2003.
Poverty has fallen further, faster, in Chile than anywhere else in Latin America (see chart). Sustained economic growth and job creation since the mid-1980s are the main explanation, though it helps that poorer Chileans are having fewer children than in the past. In recent years public policies, such as Chile Solidario, have played a bigger role. In the 1990s poverty dropped by half a percentage point for each point of economic growth, but now it falls by one-and-a-half points, according to Clarisa Hardy, the planning minister.Chile Solidario aims to help the poorest support themselves, by ensuring they take up various social benefits and keep their children healthy and at school, and by offering training and a grant to set up a small business. It is too soon to tell whether it will be a long-term success: the first of 250,000 very poor families enrolled in the scheme are only just graduating from it. Even so, Chile has a chance of all but abolishing poverty in the next few years.
Some Chileans argue that the national poverty line, of $90 a month, is set too low. In Santiago this buys just four bus fares a day. Income distribution in Chile is becoming slightly less unequal. The richest tenth of the population still take 38.6% of national income, though this is slightly less than they take in the United States. Using the relative yardstick favoured in many European countries, 27% of Chileans would be poor, according to Juan Carlos Feres of the UN Economic Commission for Latin America and the Caribbean.
The fact that alternative ways of measuring poverty are now being discussed is a sign of how far Chile has come in the past two decades. It is also an indication of the tasks that still lie ahead in creating a middle-class society.
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