Economic model, centralisation and uneven development

Soto and Torche (2004) pointed out that the Chilean per capita gross domestic product (GDP) grew by approximately five per cent annually between 1975 and 2000, but regions did not benefit equally from this growth: “poverty declined significantly in all regions but regional income inequality remained stagnant” (Soto and Torche, 2004, p.401).

Some researchers assert that this income inequality and uneven development of the country have been the result of neoliberal reforms (Ferrada Borquez, 2000; Solimano, 2012; Soto and Torche, 2004). After the coup d’état on September 11, 1973 as led by the General Commander Augusto Pinochet against the elected government of Salvador Allende, substantial neoliberal reforms were implemented (Solimano, 2012) which were consolidated within the Constitution of 1980 (Ferrada Borquez, 2000). Such reforms were characterised by an aggressive strategy of privatisation and market liberalisation, which included the privatisation of basic social services such as health, education and pensions, trade opening, and deregulation (Klein, 2008; Solimano 2012). Although these neoliberal reforms had the intention of reinvigorating the Chilean economy, they produced significant regional disparities and social inequality (Quitral Rojas, 2009). According to Solimano (2012), after 20 years of left-wing governments —from 1990 to 2010— the

implemented neoliberal reforms in the past have not been counterbalance or neutralised, on the contrary, in some cases, they have been deepened: more trade opening, and progressive withdrawal of the state role on pensions (Solimano, 2012) and on emergency response and reconstruction (Pulgar Pinaud, 2014b; Sandoval and González-Muzzio, 2015).

Several studies and researchers (Quitral Rojas, 2009; Soto and Torche, 2004) assert that neoliberal reforms have also promoted social, economic and political centralisation. This centralisation —reflected in the city of Santiago, where the wealth and one third of the national population is concentrated— has produced uneven development in the rest of Chile. Just in terms of GDP, the Santiago Metropolitan Region (SMR) contributed almost half of the national GDP (see Table 4.5). In terms of population, accessibility to public services and employment, the tendency is strikingly similar. Job opportunities, educational quality, access to institutions and a wide range of services are concentrated in Santiago as in no other city or region in Chile (BNE, 2014; CNA-Chile, 2016).

Table 4.5. Regional GDP participation in percentages of national GDP

Region 1980–82 1990–92 2002–04 2003–06 2007–09 I Tarapacá 3.2 3.0 3.5 3.9 4.0 II Antofagasta 6 6 8 7.5 6.9 III Atacama 2 2 2 1.9 2.0 IV Coquimbo 2 2 2 2.5 2.5 V Valparaíso 11 10 9 8.9 8.7 RM Santiago 47 49 48 46.8 48.2 VI O’Higgins 5 5 5 4.1 4.0 VII Maule 3 4 4 3.9 3.8 VIII Biobío 12 11 10 10.4 10.1 IX La Araucanía 3 3 3 2.6 2.7 X Los Lagos 4 5 5 5.0 4.9 XI Aysén 1 1 1 0.7 0.7 XII Magallanes 2 2 1 1.7 1.4 Total National GDP % 100 100 100 100 100 GDP per capita 5,092 6,487 10,409 11,386 12,222

Compiled by the author (2017), based on Banco Central (1984, 1993, 2007, 2011) and World Bank (2016)

Compiled by the author (2017), based on Banco Central (1984, 1993, 2007, 2011) and World Bank (2016)

Compiled by the author (2017), based on Banco Central (1984, 1993, 2007, 2011) and World Bank (2016)

Compiled by the author (2017), based on Banco Central (1984, 1993, 2007, 2011) and World Bank (2016)

Compiled by the author (2017), based on Banco Central (1984, 1993, 2007, 2011) and World Bank (2016)

Compiled by the author (2017), based on Banco Central (1984, 1993, 2007, 2011) and World Bank (2016)

According to Riffo (2007), although most of the national concentration in economic, political and demographic terms occurred in the SMR, some regions reached economic growth mainly due to the exploitation of raw materials such as copper (Northern Chile), wood (South-Central Chile), and fishing (Southern Chile). As Table 4.5 shows, however, this economic growth has not necessarily translated into a reduction in centralisation. In general, the contribution of regions to the national GDP shows very little variation between 1980 and 2009. Although there are other figures that can be used to demonstrate this view, the point here is to discuss whether the territorial/scalar structure of the state has predisposed the uneven development of territories and, if that is the case, what the repercussions are of this uneven development for the production of vulnerability and risks.

It is equally important to mention here the role of the SUBDERE, being the major state effort to counteract centralisation and to balance the development of regions. SUBDERE is responsible for coordinating, promoting and evaluating decentralisation and regional development. Established in 1984, SUBDERE aims to contribute to municipal and regional development, promoting capacity building and giving coherence to the country’s decentralisation processes. SUBDERE controls one of the primary funding sources for regional and local governments, the National Fund for Regional Development, or FNDR (OECD, 2013). Another similar instrument managed by SUBDERE is the Municipal Common Fund, or FCM, a distributive tool that aims to equalise income disparities between municipalities throughout the country. Despite the intentions of SUBDERE and these mechanisms, Boisier (2000) asserts that SUBDERE in general, and the FNDR in particular, have caused more centralisation and reinforced inequality. The FNDR used to be a “reinvestment budget where five per cent of the regional GDP must be used within each region”; however, this idea was abandoned by the central government because it may produce “budgetary rigidity” at the national level (Boisier, 2000, pp.93-94). In other words, it would have reduced the capacity and power of the national government to control and decide such budgets (Boisier, 2000). Today, most of the orders and decisions related to FNDR and FCM are taken from and directed by Santiago, by

ministries and inter-ministerial committees which secure the execution of their sectorial projects, generally overriding regional priorities and interests (Pressacco, 2009). In March 2013, I interviewed an official from the regional government of Los Lagos, who referred to this issue:

“FNDR projects are great instruments for development; the problem is that those projects must always be aligned with national priorities, and often regional needs are far from those [...] moreover, the decision-making occurs in Santiago, with national authorities or a committee of experts that reports to the same national authorities”.

(Javier Martinez, male, Regional government official, March 2013, interview) This reflects that regional developmental tools such as the FNDR are indeed aligning regions to the national development strategy, being national authorities who decide both national and regional plans. From this perspective, it seems that top-down structure could have some effects on regional and local civil protection plans, as the priorities and needs of each region and city differ. I explore some unforeseen effects of this top-down approach in the case of post-disaster Chaitén in the next chapter.

Montecinos (2005) and Pressacco (2009) agree that decentralisation processes are rather scarce and some landmarks, such as the creation of regional councils in 2014, and some progress on fiscal matters need mentioning. But again, the expected decentralisation is only administrative rather than at the political and economic levels. One variable, observed by Atienza and Aroca (2012), places emphasis on the fact that the “excessive centralisation” of the SMR has negatively affected the spatial inequality in terms of an “uneven distribution of production, employment and population throughout the country” (Atienza and Aroca, 2012, p.263). Moreover, Atienza and Aroca (2012) and Soto and Torche (2004) agree in asserting that public policies have tended to systematically ignore spatial inequality, which is an illustrative example of the failure of SUBDERE’s objectives in reducing the negative impacts of centralisation (Mac-Clure and Calvo, 2013).

Likewise, inequality has been systematically associated with neoliberalism, because deregulation policies, tax liberalisation and the privatisation of public services have, on the one hand, tended to concentrate economic and political power in few hands and elites (Harvey, 2005) and, on the other hand, have exacerbated marginalisation and the impoverishment of social groups (Solimano, 2012). Economically powerful communities and regions in Chile, such as Santiago, externalise risks onto poorer and less powerful populations by establishing an uneven development in a variety of ways. For instance, housing and land market liberalisation have limited access to safer areas to the rich, while less powerful groups are restricted to areas with limited access to opportunities —i.e. jobs, health and education— or access only to disaster- prone ones (Lees et al., 2015). Furthermore, neoliberal institutional arrangements have allowed powerful economic elites to establish new enrichment sources, such as those from reconstruction projects (Gonzalez-Muzzio and Sandoval, 2014). Previously, different researchers (Collier, 2013; Gunewardena and Schuller, 2008) have attempted to connect neoliberalism and disasters. In Chile, some researchers (González-Muzzio and Sandoval, 2014; Pulgar Pinaud, 2014a, 2014b) have questioned reconstruction processes that are highly influenced by the growing participation of the private sector.

Finally, as presented throughout last two sections, the logic of the state territorial organisation of Chile can be properly understood under the rationale of economic development and geopolitical interest. The concentration of political power and economy, neoliberal policies, and patterns of uneven development among regions are apparently intertwined in the case of Chile (Atienza and Aroca, 2012; Boisier, 2000, 2001; Pressacco, 2009; Riffo, 2007; Soto and Torche, 2004). Therefore, an exploration of the potential implications of such processes —i.e. models of territorial organisation of the state, processes of centralisation and decentralisation, and neoliberal reforms— for the model of DRM and DRR, and therefore for the production of vulnerability and risks, becomes very important. In other words, the root causes of disasters and risks may be found in those macro processes which initiate the path to the materialisation of disaster vulnerability and unsafe conditions.

Figure 4.6. Potential links between root causes and unsafe conditions in Chaitén

Source: elaborated by the author (2017)

In Figure 4.6, I hypothesise about potential connections within the progression of vulnerability that are not yet evident. These seek to formulate trajectories to be explored and elements that should be further investigated in the case of Chaitén — for instance, how the territorial structure of the state and its scalar configuration (its centrality) may have affected the scalar organisation of DRM and DRR and why, and ultimately, how policy responses to disasters and the model of disaster risk reduction may have facilitated the materialisation of unsafe conditions in Chaitén. The next figure tries to explain the trajectories I have chosen to take the reader to this point.

Figure 4.7 shows, as in the introduction, that the case study is investigated from two entry points. The first occurs within this chapter, in which I look at the major historical processes related to the context of Chile, and from a multi-scalar perspective. The second entry point will take place in Chapter Five. Alongside with post-disaster Chaitén itself, the idea of this second entry point is to investigate the same elements discussed in this chapter but from the bottom up, from the local and particular unsafe conditions in Chaitén, connecting the relationships with root causes and

e.g. e.g. #Neoliberal reforms #State territorial organisation #Centralisation e.g. #Top-down, reactive model of DRM/DRR #Inequality #Uneven development #Limited access to public services #Trust in public authorities e.g. Earthquake Volcanic eruptions (Rapid onset hazards) ROOT CAUSES RISK= Hazard x Vulnerability R=HxV DYNAMIC

PRESSURES UNSAFECONDITIONS

DISASTER