Tag Archives: Chile

Supporting Democracy through… Tourism?

For vacationers looking for more than some sun and relaxation, there is an endless array of creative travel options, from dining tours to ecotourism, service projects to extreme sports. But what about the savvy headline reader who wants to make sure her hard-earned vacation fund supports a country that serves its citizens? Call it “democracy tourism.”

With so much choice for consumers, the world’s ministries of tourism need to work that much harder to attract foreign visitors. As a traveler, you’ve got the power! While looking for great food, wine, music, or beach destinations, world travelers can also make a statement with their dollars by choosing a country that is moving towards democracy.

A little intellectual for vacation research? Perhaps. But you can travel guilt-free, knowing the locals you meet on your trip live in a society that is working for them. Here are five destinations that satisfy both the avid traveler and the conscious world citizen.

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The amazing Chilean rescue mission

Who could not be amazed by the week’s news footage of 33 miners being rescued from a collapsed Chilean mine after being trapped for 70 days 700 meters below the earth’s surface? The Chilean rescue mission was an amazing feat of technology and organized planning—especially given that country earlier this year suffered a crippling earthquake, one of the largest in its history. The event has focused renewed attention of the powerhouse that Chile has become in the region. Its president, Sebastián Piñera, already  one of the country’s richest and most successful businessmen, now enjoys success as a humanist who went to great lengths to save the 33 trapped miners. But President Piñera was not the only person making headlines because of the rescue.

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Governance Matters

Natural catastrophes are beyond any government’s ability to control, regardless of the best intentions and planning. The earthquakes in Haiti and Chile and their tragic consequences are reminders of this. Yet, the respective national responses are also reminders that governance matters. The disparity between the two governments’ responses to a natural disaster was highlighted in recent separate analyses by Paul Collier and Anne Appelbaum. Despite years of development aid and capacity building, the Haitian government was largely unable to provide for its citizens prior to the earthquake. It was then overwhelmed by the consequences of that event. The needs both before and after the earthquake have been filled primarily by nongovernmental organizations (NGOs). A consequence of this, concludes Collier, has been the marginalization of the Haitian state.

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Tracking Disasters and Improving Donor Coordination

Ushahidi map for Haiti after the earthquake

What do Kenya, Haiti, and Chile have in common? Socially-devastating events – whether they are man- or nature-made – and the need the help people in a desperate situation.

When ethnic violence spread across Kenya following the presidential election in 2008 not only the country, the whole region was shocked over the magnitude of the disaster.  More than a thousand dead and more than a hundred thousand displaced – a real human catastrophe.  The real problem faced by those seeking to restore peace was documenting instances of ethnic violence and figuring out where help is most needed.

A post on one of the forums by a Kenyan national suggested the development of an online mapping system, that would allow citizens to report instances of violence using the most common technology available – cell phones.

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Platforms matter: Another lesson from Chile


Chile is the freest economy in Latin America and the tenth in the world. Chileans exercise their political rights and civil liberties freely. The country’s pension reforms, tax policies, conditional cash transfer programs, and management of rents from natural resources are successful policies that other policymakers around the globe have observed and draw lessons from to advance policy changes in their own countries. Chile’s positive trajectory after Pinochet continues to be an example for reformers. The country’s recent elections provide a further example. Many have analyzed the election from the lenses of tycoons rising to power, or a new wave of center-right governments in Latin America.  The election brought to power Sebastián Piñera’s Coalición por el Cambio by beating the incumbent Concertación. Coalición por el Cambio’s success offers another framework of analysis: platforms matter in elections.  

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Pension System Reform – Coverage and Risk

Chile has changed its pension system. This is big news, considering how controversial the current system was when it was introduced in the early ‘80s and how vaunted it has become, being emulated around the world.

Earlier Chile had a so-called PAYGO or pay-as-you-go system, in which today’s workers contribute to the system and those contributions are (for the most part) paid out for today’s retirees. One major problem with PAYGO systems is demographic bulges in which more people retire than enter the workforce, creating imbalances in the ratio of persons being “supported” by current workers. Increasing life expectancy exacerbates that problem further. In the individual account system that Chile adopted, workers contribute to their own accounts, investing those contributions in government-approved and –regulated funds and earning a return to be paid out upon their own retirement. (Somewhat similar to 401(k) or IRA funds that Americans are used to.)

When the Chilean system changed, workers who had been in the old system received credits for switching to the new one. Employers became exempt from their mandatory contributions to the system and in return were required to increase wages comparably to ensure that overall compensation levels didn’t drop. There were other idiosyncrasies and terms, of course, and by and large the system came to be viewed as successful. If you’re interested in the in-and-outs of the accompanying fiscal policies, national savings plans, actuarial projections, safety net minimums, and ROI information, etc, the Congressional Budget Office has a pretty straightforward summary here.

As other countries adopted or adapted the approach, many of their debates centered not just on the technicalities of the system but also on the fact that they had been undertaken by an autocratic regime (Pinochet’s) and therefore did not face the kind of public scrutiny and give-and-take policy discussions that democracy demands. Thus democratic countries perceived a higher hurdle in introducing such changes to wary publics and feared that various interests would dilute reform proposals to the point of damaging the benefit. That was certainly the case in Hungary in the mid-90s when I was there and CIPE was cooperating with local groups, the World Bank, and USAID on pension reform proposals there.

Over time, the Chilean experience delivered, however, and a diversity of countries adapted similar systems. This week’s change is the first major change to the system since. It covers a big hole because it extends to self-employed, housewives, vendors, farmers, and others who were not in the pension savings system. The change will cost Chile an estimated $2 billion per year and affect about 600,000 people – most of whom are in the informal sector that still represents some 30 percent of Chile’s economy. That’s big change. Fortunately, Chile is in a strong economic position to tackle this. And evolutionary policy that adapts to changing public needs is a healthy reflection of Chile’s democratic reform as well. In making this change, elected leaders are being responsive, as they should be.

The question that bugs me, though, is whether this is not a band-aid for the problem rather than a fix. If the change is necessitated by the fact that so many folks are in the informal sector and thus uncovered, wouldn’t it be better to extend coverage by facilitating their entry into the formal system–which would extend a host of other benefits as well–rather than by jerry-rigging coverage by increasing government expenditures? Chile may not be able to afford those increased government expenditures in leaner times, yet it might further extend its growth by helping businesses thrive legitimately. The band-aid helps in the near term, but I hope the underlying infection isn’t riskier in the long term.