CHILE’S THRUST TOWARDS FINANCIAL FRAGILITY

ABSTRACT This paper argues that the Chilean economic model is characterized by three stylized facts that undermine its view as a free market/neo-liberal success: A lower trend in the rate of growth of GDP, increased inequality, and rising indebtedness. Since the mid-1990s GDP growth has trended downwards. This has been accompanied by an increase in the profit relative to the wage share. Chile has also one of the highest levels of personal income inequality across the OECD countries. The combined effects of the decline in trend growth and high levels of inequality have given rise to increased indebtedness of the household sector, especially of lower income households, and the corporate sector. Lower trend growth, high inequality and increasing debt are the perfect mix that can lead to a context of financial fragility, which puts in doubt the sustainability of the Chilean economic model. EL IMPULSO DE CHILE HACIA LA FRAGILIDAD FINANCIERA RESUMEN Este trabajo argumenta que el modelo economico chileno se caracteriza por tres hechos estilizados que cuestionan el exito atribuido al libre mercado y al neoliberalismo: una baja tendencial en la tasa de crecimiento del producto interno bruto (PIB), acompanado de un aumento de la desigualdad y del endeudamiento. Desde mediados de la decada de 1990, el crecimiento del PIB ha mostrado una tendencia a la baja. Esto ha ido acompanado de un aumento de la participacion del beneficio en el PIB. Este contexto ha dado lugar a un incremento del endeudamiento del sector de los hogares y del sector corporativo. La disminucion del crecimiento tendencial, la alta desigualdad y el aumento de la deuda pueden conducir a un contexto de fragilidad financiera, lo que pone en duda la sostenibilidad del modelo economico chileno.