Economic Governance and Growth in Chile, 1984-2004

Chile has undergone profound economic, social and political changes over the past two decades, marked by high growth and poverty alleviation. Strong economic governance is the main factor behind this performance. Policy quality, institutional capacity and reasonable consensus have created a propitious environment for growth. This paper analyzes the interplay between the governance factors and growth in Chile during five periods from 1984 to 2004. Considering that this transformation has not been a smooth process, changes in the pace of reforms are analyzed to better understand the positive, as well as the negative, interactions between governance factors. This analysis shows that when policies, institutions, and consensus operate in a consistent environment, sustained progress follows. This view demands a balanced agenda that simultaneously strengthens these three spheres.