Mexico | Lessons from Chile: Market and State must complement each other

Summary

In the last thirty years, Chile has experienced an economic miracle. It went from having a GDP per capita 50% lower than that of Mexico in 1974 to one 47% higher than our country in 2022.

Key points

• Key points:
• In that period, it went from being a mid-table country in Latin America to being, without a doubt, the most advanced economy in the region. Not only was this significant economic growth observed, but there were also great social advances.
• Despite all these advances, beginning in 2019, Chile experienced enormous protests and social discontent, which led to the election of Gabriel Boric and the process of promulgating a new Constitution.
• How can these protests have occurred in the Latin American country that has experienced the most remarkable economic and social progress in the last half-century? This is the question posed by the economist at the University of California, Los Angeles, Sebastián Edwards, in a magnificent recently published book called "The Chile Project. The Story of the Chicago Boys and the Downfall of Neoliberalism."
• What lessons does Chile leave for Mexico? First, growth is a necessary but not sufficient condition to achieve social welfare. Inequality matters. Another lesson is that markets are the most efficient mechanism for producing goods and services in most cases. Still, some essential services, such as health, education, and pensions, cannot be left exclusively to the invisible hand.

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