Which Has The Better Economy: Argentina Or Chile?

[ajoknoblauch]

I have lived in both countries. Chile is the neoliberal poster-boy of the Americas - the country was completely reformed under the Pinochet government . The members of the government in charge of the reform had mostly studied at universities in the US (the so called Chicago Boys). As a result almost everything is privatized today in Chile: healthcare, public transportation, pensions, education (from elementary school to university), large portion of the highways system (and it is expensive), utilities (I paid way more in Chile than in Argentina) etc. etc. A friend of mine is a single mother in the Valparaiso region and she pays a fee every month to some ambulance provider - so in case something happened to her daughter she gets an ambulance coming to her house. Also my impression was that higher education was quite expensive (but not that good) when considering the average income - preventing members of the lower classes from sending their kids to college. There are often mass demonstrations in Chile demanding free education. The pictures of the police beating up the students resemble footages from the time of the military coup.
Regarding the GDP per capita in Chile: Have you looked at the distribution of the income? My impression is that there is a very small very rich upper class (with strong ties to the current center-right/extreme right government and the former Pinochet government) but a lot of poor Chileans and even lower middle class members seem struggling to make it. Also wealth seems to be concentrated in some parts of Santiago (center versus periphery).

Having that said I think it is easier to start a business in Chile. The laws and (less) regulations in Chile are business friendly and consumer protection seems to be very limited. As some have mentioned in another thread there is even a program that gives you (expats!) around $40.000 USD to start up your business (program called "Startup Chile") and you do not have to pay it back. I have met some young entrepreneurs who got the grant - all of them left Chile after finishing the six months of the program.

The Pinochet "government" was a dictatorship (truth-in-labeling).

 

[germano]

The Pinochet "government" was a dictatorship (truth-in-labeling).

Absolutely it was a dictatorship - but still a government (although not democratically legitimized) and with a legislature consisting only of the four generals (heads of the army, navy, air force and carabineros).

 

[germano]

I have friends in Chile. I don't think money falls out of the sky on them but they work very hard and they do very very well. Started out the father made some kind of change purses and sold them on the street, the girls came along and both went into business a few levels up from him. One started making posters (advertising) and struggled for a long time and now her business is booming and she sells all over Chile. I don't know what you would call rich (at what point) but she is extremely well to do. But no one gave it to her. Took her several years to get it really making the bucks but it does now. The other rented a large house in Valdivia and established a hospedage and was very successful. I think this is how it is supposed to work. There may be a large rich group, but I have watched this family over years and I know first-hand that in Chile if a person is willing to work, they can become very successful.

I wasn't saying that there is no middle class in Chile. It is just if you look at the GDP per capita - you also have to check the distribution of the wealth. And as I said Chile does indeed have business friendly laws and regulations (at least compared to many other latin american countries).

 

[ajoknoblauch]

A comment on Chilean highways: while the tolls are relatively high, they are immaculately maintained and policed. The people who pay those tolls are people who can afford automobiles and, in Chile, there is a serious revisión técnica. A lot of the chatarra that we see on Argentine roads would get towed away and junked in Chile. The tolls have minimal effect on bus fares.

 

[germano]

A comment on Chilean highways: while the tolls are relatively high, they are immaculately maintained and policed. The people who pay those tolls are people who can afford automobiles and, in Chile, there is a serious revisión técnica. A lot of the chatarra that we see on Argentine roads would get towed away and junked in Chile. The tolls have minimal effect on bus fares.

That is true - the toll highways are mostly in very good shape. But I found them really expensive (at least compared to the countries I have lived/driven in before). I drove several times between Santiago and Puerto Montt and it cost so much money. In addition to the tolls the gasoline prices are really high. In comparison the drive on the Argentinian side from Bariloche to Mendoza was a lot much cheaper and the road conditions were ok (and more scenic - but that's a different story). And although tolls do not have an effect on the bus fares - they do have an effect on the prices of many products. Usually the further away you get from Santiago - the more expensive goods, fuel, gas etc. get. - at least towards the south.

 

[ajoknoblauch]

That is true - the toll highways are mostly in very good shape. But I found them really expensive (at least compared to the countries I have lived/driven in before). I drove several times between Santiago and Puerto Montt and it cost so much money. In addition to the tolls the gasoline prices are really high. In comparison the drive on the Argentinian side from Bariloche to Mendoza was a lot much cheaper and the road conditions were ok (and more scenic - but that's a different story). And although tolls do not have an effect on the bus fares - they do have an effect on the prices of many products. Usually the further away you get from Santiago - the more expensive goods, fuel, gas etc. get. - at least towards the south.

The reason things are more expensive in Chile's south (and north) is the distance-decay effect from Santiago. In Argentina, the government dictates otherwise with, for example, unwarranted fuel subsidies in Patagonia. Chile's fossil-fuel resources are limited, so they pay market price for importing fuel.

 

[internationalguy]

The reason things are more expensive in Chile's south (and north) is the distance-decay effect from Santiago. In Argentina, the government dictates otherwise with, for example, unwarranted fuel subsidies in Patagonia. Chile's fossil-fuel resources are limited, so they pay market price for importing fuel.

All fossil fuel sources by definition are limited. Otherwise they'd be renewable energy.

 

[germano]

The reason things are more expensive in Chile's south (and north) is the distance-decay effect from Santiago. In Argentina, the government dictates otherwise with, for example, unwarranted fuel subsidies in Patagonia. Chile's fossil-fuel resources are limited, so they pay market price for importing fuel.

True - but as a result they cut down all the trees (including the officially protected Alerce trees) in the south and heat their houses with fire wood. Maybe subsidized gas for heating would not be a bad idea in the south.

 

[ajoknoblauch]

True - but as a result they cut down all the trees (including the officially protected Alerce trees) in the south and heat their houses with fire wood. Maybe subsidized gas for heating would not be a bad idea in the south.

Chile has well-managed alerce forests, but the widespread use of firewood pollutes its southern cities - much of that firewood is introduced species. Argentina has failed to live up to its contracts to deliver natural gas.

 

[germano]

Chile has well-managed alerce forests, but the widespread use of firewood pollutes its southern cities - much of that firewood is introduced species. Argentina has failed to live up to its contracts to deliver natural gas.

There wasn't much managing in the lakes region when I lived there. Though today the alerce wood is apparently not used as firewood anymore they still cut the trees for furniture, shingles etc.. Oficially they are only allowed to cut the sick trees - but they have their tricks. And the other trees cut down for firewood are also trees native to the region but not protected. They then use the freed space for cattle or houses. Only some supermarkets like lider and jumbo sometimes sold small amounts of firewood from eucalyptus, but that came from further north. Take a trip around the Llanquihue lake and you can see the results ...