THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Chile

Ranked 31st of 149

At a glance

Ranks

31 st on the Legatum
Prosperity Index™

57th
43rd
25th
36th
51st
49th
34th
63rd
20th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Chile performs best on Natural Environment and Governance and scores lowest on the Social Capital sub-index.

Visit our Rankings table to see how Chile compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

In less than a decade, Chile has slightly improved its prosperity surplus, becoming the third most prosperous nation in Central and Latin America, with major improvements to Safety & Security and Personal Freedom aiding this impressive increase.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Chile is part of a continent that, taken as a whole, seems unable to truly unify under one program of prosperity; each country appears to focus on a few particular areas to focus on as, ostensibly, other sub-indices take a hit. The result of this is that Latin America is the only part of the world that has not yet separated prosperity delivery from economic growth. Of course it is difficult for any nation, particularly one that lives in a continent that has been exploited over the years by various dictators and lack of democracy, to balance every area of prosperity. Chile for the most part however, has risen in the Prosperity Index by improving a few areas, but most significantly, this rise has been limited by large falls in other sub-indices.

This concept of improvement can clearly be seen when looking at the economy of Chile, a concept that initially looks to be in decline (in terms of ranking). Economic Quality peaked in 2012 at 44th, before Chile’s rank began to drop to 57th by 2016, two ranks lower than in 2007. Many of these economic problems seem specific to Chile: the prevalence of trade barriers began to increase, and the percentage of people living comfortably on their income began to decrease. Additionally, from a Business Environment perspective, a sub-index that saw Chile’s rank fall ten places to 43rd in 2016, and other failures can be seen, like less affordable financial services, can be said to attribute to this decline. Yet, that the official ranking of these categories reveals Chile to be slipping, does not do Chile’s improvements justice. Stark improvements to poverty rates, female participation in the labour force, and unemployment, as well as almost halving redundancy costs and significantly improving ease of resolving solvency, illustrates a Chile that is gaining momentum in sub-indices that on the surface reveal it to be failing.

Governance remains high in Chile, a sub-index where most of its regional peers have failed to really make headway. In 2007, it was the highest in Central and Latin America. One thing to note however, despite this positivity, is that voter turnout has dropped 10% in the last decade, revealing a possible voter dissatisfaction with the system of elections. In the presidential elections in 2013, none of the nine standing candidates received more than the needed 50% of the vote, and so the top two candidates were chosen; in a similar way the FPTP electoral system causes grievances in the UK, or the Electoral College system in the states creates the same result in the US, this outcome could have affected subsequent voter turnout. However, this should not wholly detract from Chile’s continuing improvements in what is its second highest ranking sub-index, particularly as dropping voter turnout in Chile did not hamper its standing globally, as voter turnout has decreased worldwide.

As several sub-indices have already proven to be superficial at first glance, the same can be said to be true of the Education sub-index. While Chile does in fact top the index for Central and Latin America, and has done since 2007 with a staggering 15 rank gap between Chile and Costa Rica, who took 2nd place in the region, it ignores the fact that Chile has slipped six ranks in Education in a decade. A fall in percentage in overall satisfaction with the education system, dropping below 50% in 2012, substantial losses in the stock of tertiary education in the workforce, and a fall in adult literacy, the latter two of which are against the global trend, have overshadowed improvements.

Chile’s main and sustained improvements have come in the Safety & Security and Personal Freedom sub-indices. Chile now tops the Safety & Security rankings for Central and Latin America and has edged into the global top 50. For the most violent region in the world, this is no mean feat. Chile’s progress has come from reducing terror deaths and rising perceptions of safety. Personal Freedom too, has seen a vast improvement, with Chile rising rapidly from 75th in 2007 to 34th in 2016. Improvements in openness to the LGBTQ community, immigrants, and just general enhancement of integration in cities and individual satisfaction of freedoms, have aided this vast jump in rank for Chile, particularly at a time when global trends are seemingly going to opposite way.

Chile joins a number of nations looking to vastly improve their Personal Freedom rankings, with Panama, Argentina and Bolivia used alongside Chile to illustrate the improvement of leaders in this sub-index.

The biggest threat to Chile’s prosperity comes from its falling Social Capital performance, where it has dropped 25 ranks to 63rd. This has come as a result of collapsing voter turnout when compulsory voting was removed in the 2013 elections, and a sharp fall in the numbers giving to charity. Unless this social strength can be bolstered, future prosperity may be hard to secure.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.