1. Chile: A Bias for Hope Javier Santiso Chief Economist / Deputy Director OECD Development Centre Latin American Economic Outlook Conference Vittorio Corbo President, Central Bank of Chile Paris 29 th January 2007

2. 2 Chile: The rise of possibilismI Institutional anchoringII ConclusionsIII

3. 3 Latin America has experienced macroecomic improvements … 0 50 100 150 200 250 Latin AmericaTotal Emerging Markets Inflation Source: OECD Development Centre, 2006. Based on: IMF Statistics. 1980 19902000 2005 (%)

4. 4 Fiscal Balance by Country 2005 -4%-2%0%2%4%6% Brasil Colombia Peru* México Venezuela* Argentina* Chile* … but Chiles macroeconomic management has been exemplary: The fiscal anchoring 0 100 200 300 400 500. Argentina Peru Brazil Colombia Chile Venezuela Mexico Debt as % of Exports Average Debt ratios as Share of Exports 1996-2006 Source: OECD Development Centre, 2007. Based on IMF, World Bank, National Data % of GDP

5. 5 Chiles insertion in the international scene is remarkable compared to other emerging economies 010203040506070 Mexico Chile Venezuela Uruguay Argentina Colombia Peru Brazil Trade openness in 2005 Source: OECD Development Centre, 2007. Based on: Intracen and Index of Economic Freedom (Wall Street Journal). Based on: UNCTAD and Intracen.

6. 6 0 10 20 30 40 50 60 70 1234567891011121314151617181920212223 Num. periods ARGENTINABOLIVIACOLOMBIACOSTA RICACHILE EL SALVADORMEXICOPERUURUGUAY Return of Democracy Evolution of Pension Funds in Latin America (in % of GDP) Gradualism and Continuism: The example of Pensions Reforms % Source: Javier Santiso, Latin Americas Political Economy of the Possible: Beyond Good Revolutionaries and Free Marketeers. MIT Press. 2006. Based on the Inter-American Development Bank

7. 7 Chile: The rise of possibilismI Institutional anchoringII ConclusionsIII

8. 8 Institutional anchoring: A key driver of possibilism Source: Mariano Tomassi. The Institutional Foundations of Public Policy. Journal of the Latin American Economic Association. Spring 2006. Public Policies in Latin America

9. 9 Institutional anchoring: A key driver of possibilism Source: Mariano Tomassi. The Institutional Foundations of Public Policy. Journal of the Latin American Economic Association. Spring 2006. Public Policies in Latin America

10. 10 Institutional anchoring: A key driver of possibilism Source: Mariano Tomassi. The Institutional Foundations of Public Policy. Journal of the Latin American Economic Association. Spring 2006. Public Policies in Latin America

11. 11 Chile: The rise of possibilismI Institutional anchoringII ConclusionsIII

12. 12 A bias for hope: The blessings of Democracy Average Source: Javier Santiso, Latin Americas Political Economy of the Possible: Beyond Good Revolutionaries and Free Marketeers. MIT Press. Cambridge, Massachusetts, 2006 Based on the Inter-American Development Bank Democratic regimes in Latin America since transition (1978-2005) 0 5 10 15 20 25 30 35 40 ColombiaVenezuelaPeruMexicoArgentinaBrazilChile Years

13. 13 A bias for hope: The blessings of Democracy Source: Mariano Tomassi. The Institutional Foundations of Public Policy. Journal of the Latin American Economic Association. Spring 2006.

14. 14 A bias for hope: The blessings of Democracy 1.0 1.5 2.0 2.5 3.0 3.5 4.0 1.01.21.41.61.82.02.22.42.62.83.0 Congressional Capability Index (1-3 scale) Policy Index (1 - 4 scale) Congressional Capabilities and the Quality of Policies Source: IADB Politics of Policies Report, 2006 and UNDP, 2005 Chile

15. Chile: A bias for hope Javier Santiso Chief Economist / Deputy Director OECD Development Centre Latin American Economic Outlook Conference Vittorio Corbo President, Central Bank of Chile Paris 29 th January 2007