Chile Income Inequality

Chile is rightfully celebrated for the socio-economic progress that it has achieved over the past several decades. But although it has seen a substantial reduction in poverty, Chile still has a high degree of economic inequality, like most other Latin American countries. According to the Wikipedia,* in 2011 Chile ranked in the 155^th position out of 176 countries in terms of the GINI Coefficient, the most widespread statistical measurement of income inequality, with a figure of 50.8. The CIA gave it an even higher figure—52.1—in 2009. As a 2011 article in the Council on Hemispheric Affairs put it, “When the media and politicians report on Chile’s growth they tend to omit where that growth is taking place and who reaps its benefits; the statistics are without a doubt positive, but the majority of Chileans are not represented by that growth.”

 

More recently, however, Chile’s gap between the rich and poor has declined to some extant. A 2014 New York Times article went so far as to claim that “while vast disparities continue to exist, Chile, like much of Latin America, is practically the only place in the world today where the income gap is actually shrinking rather than widening.” The same article, however, argued that such gains are threatened by the current slow-down in China’s imports of Chilean products.

Some of Chile’s own statistics indicate somewhat less income disparity than those of the World Bank of the CIA. The Ministry of Social Development of Chile’s 2013 Casen Survey gave the country a GINI figure of .436. If accurate, this would place Chile in a position near that of the United States, a country with a moderately high level of income inequality.

Chile’s level of income inequality varies considerably from region to region. According to the Casen Survey data, the GINI coefficient is highest in greater Santiago, the country’s center of wealth, which nevertheless has a significant degree of poverty. It is also fairly high in such relative poor regions as Araucanía, Los Ríos, and Los Lagos. Otherwise, the patterns on the GINI map of Chile are rather indistinct. One interesting feature is the relatively low inequality figure in Arica and Parinacota in the extreme north. As can be seen in the maps found in the previous post, Arica and Parinacota is characterized by a lower-than-average level of income and a higher-than-average level of poverty, yet it also has somewhat elevated figures in regard to the possession of durable products, such as computers and especially vehicles.

Where Arica and Parinacota really stands out, unfortunately, is in its incarceration rate, which is by far the highest in the country. Interestingly, relatively low incarceration rates are found in some of Chile’s richest regions (Magallanes) and in some of its poorest regions (Araucanía). Oddly, the north has a much higher rate of incarceration than the rest of the country, despite the fact that it is the wealthiest part of the country on a per capita basis and is also characterized by lower-than-average levels of income disparity.

Arica and Parinacota is an unusual part of Chile in several different ways. To begin with, it is quite ethnically diverse, containing a large indigenous population, the main Afro-Chilean community, and substantial numbers of persons of East Asian, Middle Eastern, and Roma (”Gypsy”) descent. Unlike the country’s other northern regions, its economy is not centered on mining, but rather on services, trade, and transportation. As explained in the Wikipedia article on the city of Arica:

Arica is an important port for a large inland region of South America. The city serves a free port for Bolivia and manages substantial part of that country’s trade.‪ In addition it is the end station of the Bolivian oil pipeline beginning in Oruro.‪ The city’s strategic position is enhanced by being next to the Pan-American Highway, being connected to both Tacna in Peru and La Paz in Bolivia by railroad and being served by an international airport.

Arica and Parinacota’s high incarceration rate is apparently related to its position as a trade hub rather than its demographic characteristics. It does not, moreover, seem to reflect the region’s actual crime rate. Although I have not been able to locate crime statistics, informal information suggests that Arica and Parinacota is a relatively law-abiding place. As one blogger writes about the region’s main city:

Arica is one of the lowest cities in crime and violence in Chile. A few times a year the city is alarmed with the news of an assault or murder, but this is a small city where lots of people know each other, so the offenders are usually caught. Regarding violence, Arica is a pretty safe place. Riots and social unrest are almost non-existent except a few university manifestations twice a year typically.

But even if Arica has a low crime rate, it does seems to be a drug-smuggling hub, as befits its place in regard to Chile’s international linkages and transportation infrastructure. The drug trade from Bolivia and Peru increased quickly in the early 1990s, and has been more recently associated with some major corruption cases. As was reported by In SightCrime, “the Arica attorney general’s office opened an investigation into more than 100 cases that could potentially uncover links between officers and drug trafficking…”

As Arica is key node in international drug smuggling, it is not surprising that many of its incarcerated individuals are foreign nationals. As reported in another In SightCrime article:

At the beginning of 2014, the Bolivian consulate in Arica counted 179 Bolivian prisoners in that city’s jail — 45 of them women — the majority for drug trafficking. The number of Peruvians held in Arica for trafficking is also high. In December 2013, according to the Peruvian consulate, there were 176. And that’s nothing: two years earlier, Chile had expelled more than 800 Bolivian and Peruvian prisoners from the country after they finished serving a five year, one day sentence for trafficking 600, 700 and even 800 grams of cocaine.

*Based on World Bank Data