In Chile, many are optimistic that prosperity is coming

 Volunteers finish building a house for needy family in Valparaiso, Chile. More than 400,000 homes have been built under President Michelle Bachelet.
Volunteers finish building a house for needy family in Valparaiso, Chile. More than 400,000 homes have been built under President Michelle Bachelet. (Reuters)

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By Juan Forero
Washington Post Foreign Service
Thursday, December 17, 2009

SANTIAGO, CHILE -- For Floripa Lizama and her family, the past is their slapdash wood-plank home located next to an unsightly concrete canal.

But they will soon be part of a new Chile, living in a home in a government-funded development under construction next to their ramshackle community.

The project is part of a modernization program that will not only eliminate shantytowns here in the capital, but also help Chile achieve another milestone: its move from developing country to developed.

"Chile's development is advancing, and we're leaving poverty behind," said Lizama, 65.

This week, the Organization for Economic Cooperation and Development, a club of rich nations that includes the United States, Japan and several European countries, formally invited Chile to join. Becoming the first South American nation in the 30-member group would be among the tangible signs of Chile's steady rise since the 1980s, when it was in the grip of dictatorship.

"It's a recognition of all the good things we've done," Andrés Velasco, Chile's finance minister, said in an interview last week.

Such a transition from developing to developed country last happened more than a generation ago -- think Ireland and South Korea. No one is exactly sure of the timing for Chile. But economists say this country of 17 million will become the first Latin American country to switch categories sometime in the next decade.

"It's well on its way to becoming a developed country, and it's not just because we see numbers that look very promising," said Marcelo Giugale, director for poverty reduction and economic management in Latin America at the World Bank. "I think there are more profound transformations happening in Chilean society that point to a very promising developed country very soon."

Chile has posted Latin America's fastest economic growth over a generation, and poverty has dropped from 45 percent before the demise of Gen. Augusto Pinochet's government to a regional low of 14 percent today. But Giugale and other economists say Chile has advanced in areas more difficult to measure, such as strengthening state institutions like the courts and fighting corruption.

Chile also has a stable and robust democracy, ruled since 1990 by a coalition of Socialists and Christian Democrats that unseated Pinochet. The current president, Michelle Bachelet, has a popularity rate hovering at nearly 80 percent.

And though polls show that a conservative opposition businessman, Sebastian Piñera, may win the presidency in a January election, no one expects an overhaul of Chile's economic system. Piñera, who won a first round of voting Sunday over the ruling coalition candidate, Eduardo Frei, has said he would not reduce government or roll back an extensive social safety net.

On the surface, Chile might seem an unlikely country for fast development. It is so isolated on the continent's fringe that Henry Kissinger once famously disparaged Chile as "a dagger pointed at the heart of Antarctica." For much of the 20th century, its copper-based economy was hobbled by boom-bust cycles.


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