Latin America is a source of examples of potentially successful countries being thrown out of progressive development because of bad governance. Argentina, riddled with all sorts of populists, is stagnating and defaulting, but 100 years ago it was the richest country in the world. Bolivia, exhausted by military coups (the military seeks balance in its understanding of a strong state, patriotism and spirituality) or Colombia, suffering from a war of drug lords with ineffective leadership.
Venezuela, now experiencing a humanitarian catastrophe, where the number of refugees is comparable to the Syrian scale. Only Syria is at war, while in Venezuela Nicolas Maduro, following the precepts of Hugo Chavez, maintains his power at any cost by maintaining a planned economy, controlled elections, and pressure on the population. This is also why a country with enormous oil resources lives at third-world level.
Latin American exceptions are little Uruguay, with open competition, social policies, and a developed banking and technology sector. Panama, as the world center of offshore – remember the notorious investigation into the “Panama Papers. And a completely separate example is Chile.
Chile is a country that comes to mind when it comes to high levels of inequality, which culminated in the not-so-distant protests in the capital Santiago. Indeed, the Gini coefficient (a measure of the level of inequality) is 0.46%, indicating a very high level of stratification (a consequence of neoliberal economic policies under political authoritarianism – tolerating inequality and prioritizing economic growth).
However, Chile is also the only country that has the highest per capita income in Latin America, and the only country in the region that ranks among the world’s developed countries. Chile came to my mind, of course, because of a brief review of the rise in copper prices in the Telegram Channel, since the Chilean economy is dependent on this resource.
Chile’s resource similarity to Russia served as a source of inspiration for Russian economic policy – admiration for Augusto Pinochet’s regime. And, indeed, Pinochet achieved economic growth in the moment while creating a tightly controlled authoritarian state and modernizing the economy (he invited many economists known as the “Chicago Boys”). Except that Chile’s entry into the class of developed countries does not belong to this period: the rapid growth comes from the 1990s, when the country abandoned the authoritarian model of government.
As leaders like Pinochet agree to new ideas in economy, import of technologies, availability of all guilty new-fangled ideas, but under condition not to touch issues of development of inclusive institutions – not to deal with issues of independent courts, development of civil rights and freedoms. That is, do not create state institutions, to which the trust of the population will grow – you cannot touch this with dictators.
Therefore, growth in such countries happens only for a while. Then there is either collision and stagnation, or political modernization for the expansion of civil liberties. The need for general democratization for economic growth and the development of society was experienced by Chile exactly as it was in the 1990s in South Korea, which understood the impasse of the authoritarian model and the importance of democracy for really vigorous economic growth.
The same inevitable role in the epiphany for democracy and the creation of inclusive institutions for economic development will be experienced by states held back by authoritarian forces even now. All that remains to be done is to await these changes.