Chile is replacing its neoliberal economic model with a socio-democratic one by applauding Gabriel Boric in the December elections.
FREMONT, CA: Leftist leaders in Latin America hailed Gabriel Boric’s election in Chile in December, while the investors pulled away leaving the country’s currency and stock market to diminish. Nevertheless, Boric has the potential to surprise both parties by forging a new left-wing political path. He might build a more progressive country and an inclusive welfare state instead of selling the economic populism of Argentina or Brazil or the authoritarian dogma of Venezuela, Cuba or Nicaragua. Chile's neoliberal economic model would be replaced with a social-democratic one, putting it on a level with other high-income countries, enriching Chile's citizens, ensuring more steady and sustainable growth, and establishing a new paradigm for its neighbours to follow.
Chile's economy has been growing steadily since its return to democracy in 1989. Three decades of market-friendly neoliberal policies have boosted international and domestic investment and economic growth, including privatisation of public works, cutting trade barriers, and deregulating capital markets. This model has increased per capita income from less than $2,300 in 1989 to more than $15,000, making Chile one of the few Latin American countries to move from middle to high-income status according to the World Bank.
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However, Chileans decided to vote for a candidate who promised to bury neoliberalism. This is mainly because, since 1990, social spending has stayed at 10 percent of GDP, roughly half of the 38-country Organization for Economic Cooperation and Development average. The nature of many public services created a tier system in which the middle and higher classes received different, and often superior, service.
Chile's neoliberal approach benefited the country's socio-economic advancement. However, as the protests of 2019 and the election results of 2021 demonstrate, that model failed to maintain its position. The nation is politically unstable to preserve economic stability and growth because of the unabated economic inequities. Even the International Monetary Fund now believes that government spending attracts rather than private investment, implying that a bigger state is favourable to a smaller state.