Economic Growth, Employment Growth, and Inequality

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In last week Sunday’s In Focus column Ian Boyne continued the argument that the state has a great role to play in economic and employment growth and the reduction of inequality, what he describes as “two very important indices of development”.

The crux of the argument is that the state cannot pledge to only reduce crime and provide an environment feasible to investment. As he ends, “No, Prime Minister, you can do no such thing unless you have a state willing to invest in people and their welfare.”

Read these key paragraphs from the article:

To listen to our financial analysts, media commentators and even some University of the West Indies academics, you would believe that it’s only ‘dundo heads’ who believe that the state can play any productive role in a modern economy. People who believe in an activist state must either be wild-eyed socialists living in a time warp, or foolish idealists who have not grown up.


Let’s start with some facts: The countries which are growing the fastest today are not those which only provide security and collect garbage. China, India and Brazil all have strong state sectors. And a country which has been heavily praised by neoliberals, Chile, is also one where the state has a very active role. Chile actually has the most impressive performance in Latin America, not Brazil.


Chile is number one in the region in terms of competitiveness, according to the Global Competitiveness Report. And according to the latest Human Development Report, Chile has the highest level of human development in Latin America, and ranks 44th out of approximately 200 countries. During the first half of the year, GDP increased by 8.4 per cent (way above Brazil’s). Chile has reduced poverty from 40 per cent of its population in 1990 to 15 per cent in 2010. There has also been significant progress in the provision of educational opportunities, health care, income support to poor families, as well as access to housing and social infrastructure. Chile, since it rejected the pure neoliberalism of the ‘Chicago Boys’ (named after Milton Friedman and other economists from the academic epicentre of neoliberalism, the University of Chicago) has been growing handsomely.

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