Wednesday, December 29, 2010

Chile Modernization of the State: A remaining challenge

GLG News Analysis

Chile Modernization of the State: A remaining challenge
October 15, 2010
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.


A modern Chilean state is not based only on electronic signatures, e-government, the single or the deepening of civil administration of the State. Are necessary, it is true, but the real modernization implies a real change in the basic structures on which this is based.


The president was very clear in his recent statements "now we're going to put workers at the level we should be and will not permit this inhumane treatment." Since 2000 we have tried various strategies that the state has sought to implement in order to establish a real agenda of modernization. This with the aim of integrating our country in the context of the first world. Unfortunately, the results of these strategies have not been what were expected, because of the emphasis that has been given to this agenda and also to have been aimed at responding to the needs of the short-term political agenda. When the authorities make an assessment on what has been done in this area, focusing on achievement of milestones such as modernizing the social security reform or transparency law, highlights advances in the pseudo environmental legislation and bills related to the modernization of main corporate governance of state-owned company, Codelco, to remove the stagnation in management and administrative schemes that are obsolete, but not geared to exploit the potential of the company to increase its added value and productivity. Similarly, the State's progress in e-government through the implementation of the single or improved tools or audit of CONAMA (Environmental Agency) or our Servicio de Impuestos Internos (SII) or IRS are not sufficient when analyzing the success of such implemented policies. A real modernization requires public policies capable of transforming the State as a whole, that is, for changing the face with which our country encounter the challenges of globalization, and such practices involve changing policies in place for decades, in both public and private sectors. A real modernization of the state involves improving levels of competitiveness of our economy and focuses the efforts of transformation to a state at the service of citizens. In this respect, three areas are essential to concentrate efforts to achieve a real modernization of the State: Investment in Research, Development and Innovation (R&D+i), Labor Market, competitiveness, productivity and market regulation, and the Chilean educational system. Current job market, a major limitation of our competitiveness is the rigidity of our labor working system. Reform is required to provide more flexibility for encouraging the young people entering in the labor market, eliminating the high exit barrier posed by the high costs of compensation and to improve the conditions of collective bargaining, creating scenarios where there is a real capacity for equal negotiation between the parties. However, more flexible working hours must necessarily to go hand in hand with a protection system to improve the conditions of unemployment insurance and worker safety granting the protection of their rights. Growth, productivity and efficiency indicators of high growth trend experienced by our country during the late 90’s have been stagnant in recent years strongly. Although we cannot ignore the achievements related to improving the conditions of our country against foreign competitors, and the large trade liberalization that has been developed, there are still gaps of inefficiency in productive sectors and micro - inequities and imbalances through high state subsidies to producers in order to improve the attractiveness of these areas, but where social gains are not generated, because the benefits of economies of scale that are produced or the higher level of profits that are not perceived by ordinary citizens. Such is the case in sectors such as telecommunications, where despite the existence of a high level of market penetration, consumer costs remain high compared to other countries. Similarly, the banking sector, even if present levels of robustness and accountability among the best in the world, effectively transferred these benefits to its customers is not seen, which delivers arguments that are used in political discussion, and undermine the benefits market as a regulator. Therefore, a modern state requires effective enforcement tools, where efforts are geared towards getting to deliver the benefits of free markets to ordinary citizens. The Education system is also an essential step to improve the conditions of the Chilean education system, but not from the point of view of the administrative structure or content of the various sub-sectors, but from the work that the teacher in the classroom delivery. Without good wages without investment our teachers they will not be professionals with a vocation and leadership who are committed to the educational project. These attributes are not learned only in the academy, but correspond to generic skills which must become essential requirements of our educators. To do this, it is essential that there is a model of certification of these skills, both for educators, a system that students can use in case of abuse, to be overseen and an evaluative process that are truly transparent and effective. It is necessary to reduce the number of students per classroom, and to be intensive in the use of technological tools. In short, it needs to improve the actual expenditure on education, but improving the productivity of each dollar spent. Singapore, which has one of the best performances in the world of assessments of the quality of education, spends less on primary education than 27 of the 30 OECD member countries. As you can see, improving the educational system requires not only more resources but also a change in the mentality of the players, starting with the state, a major structural support system. In conclusion, a modern Chilean state is not based only on electronic signatures, e-government, the single or the deepening of civil administration of the State. Are necessary, it is true, but the real modernization implies a real change in the basic structures on which this is based.
Bernardo Javalquinto
University of Maryland

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