Political Dynamic and the Welfare State in Chile under Economic Globalization

Abstract

The welfare state in Chile was transformed from a universal system into a retrenched one regulated by market forces. Welfare policy has recently evolved into a quasi-comprehensive system in which state subsidies and benefits have been expanded but guided by the logic of the private market. These dynamics are largely the result of the interplay between economic globalization and the political transition from democracy to authoritarianism and then the resumption of democratic practices. The efficiency theory of the welfare state argues economic globalization sacrifices the welfare state in order to compete with other states. The compensation theory contends that economic globalization expands compensating welfare state for the purpose of maintaining political legitimacy. This study pinpoints the mechanism that transformed Chile’s welfare state by comparing the Pinochet and Concertación regimes, and contributes to the existing literature by developing an integrated theoretical framework of efficiency and compensation theories.