MercoPress. South Atlantic News Agency

The other side of Chile's success story.

Chile is a South American economic success story which keeps coming up with impressive macroeconomic figures including the 6,1% growth in 2004, but the bonanza and its 94 billion US dollars GDP still have some way to go before a significant reduction in social inequality and be perceived.

According to Chile's Central Bank, GDP per capita rose to 6,000 US dollars last year, a figure which attracted optimistic remarks from Socialist President Ricardo Lagos, his economic team and business leaders.

"I think the country's situation, with the figures we have seen, allows us to look into 2005 with optimism", stressed President Lagos who according to local public opinion polls has an approval support above 65%.

Hernan Somerville, president to the Production and Trade Federation, or CPC, the country's largest business association, said he was "optimistic and satisfied" with the performance of the economy in 2004, which was above government and private sector estimates. "I'm very happy, especially for the country, for the country's most humble people" said Mr. Somerville who recalled that two years ago he predicted 2004 would be "the year of recovery" and "many people laughed at me".

But some analysts don't share the euphoria and believe Chile faces a disturbing reality, which is hard to understand in its full dimension with the macroeconomic figures regularly released by the National Statistics Institute (INE).

Actually official data shows that wealth distribution in Chile is one of the most unequal and unfair in Latinamerica. Chile's economy expansion last year was the most impressive since 1997, when it reached 6,6%, but in 2003 it was only 3,7%, and it coexists with 7,5% unemployment, equivalent to 480,000 people without jobs.

Joseph Ramos, head of the University of Chile's Economics Department warns that "in Chile, the rich earn 14 times as much as the poor; such ratio constitutes one of the most unequal distributions in Latin America and, in fact, the world".

A report from Chile 21 Foundation, considered Lagos' think tank, points out that 69.3% of Chileans believe authorities' chief concern should be improving wealth distribution. As many as 57.3% of Chileans interviewed believe economic growth mostly benefits the rich and hardly reaches the rest of the people.

Marcel Claude, a former Central Bank economist and current director of Terram, a non-governmental organization, underlined that "Chile is not the big winner with such growth figures. Large Chilean businesses and foreign investors are earning a lot of money, but not the country, not the average Chilean", he added. "Workers, farmers, the common man barely get crumbs and scraps" said Mr. Claude who believes the government can take no credit for last year's 6.1% expansion. "Chile's growth is linked to the recovery of the large economies, United States, Europe, Japan, China, because our development model is geared to make us suppliers of those large markets". "If they make good, we make good, but if they flounder, we flounder, independently of what we do here", added Mr. Claude.

According to the economist 96% of Chilean exports -the engine of the country's expansion- involve 1% of businesses, "all linked to natural resources" and providing an "insignificant level of employment". Small and medium-sized businesses, which provide 80% of jobs, account for 4% of Chilean exports, "and we lack proper policies to address such imbalance".

Finally Mr. Claude believes President Lagos "should be feeling more sad, than happy" because those figures only confirm strong growth among the large corporations, but "Joe Smith and Mary Doe are not improving, they earn the same salary or perhaps less, and are exposed to greater labour (flexibility) uncertainty".