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Contents | Executive summary | How to obtain this publication | Additional info
The following OECD assessment and recommendations summarise chapter 3 of the Economic survey of Chile, published on 26 November 2007.
Contents
Social spending must be sustainable over time
Government outlays on social programmes are set to rise over the medium term in a manner consistent with the structural budget surplus rule. There is scope for raising budgetary appropriations, because publicly financed spending on education and health care currently accounts for a considerably lower share of GDP than in the OECD area. This is essentially because total spending – public and private – is heavily tilted towards private components in Chile, especially in health care and tertiary education. Emphasis on housing policies is also justified, given the need to gradually close Chile’s still sizeable, albeit declining, housing deficit. The fact that conventional health output indicators, such as mortality and immunisation rates, are already good in comparison with OECD benchmarks suggests that health services are provided reasonably efficiently. But this is by no means the case for education. To illustrate, the efficiency analysis reported in this Survey suggests that Chile could improve education outcomes, measured by PISA scores, by some 16% while holding the current level of spending and non policy factors unchanged, if it were as efficient in the provision of these services as the best performers in the OECD area. It is also important to bear in mind that, for an increment in public spending levels to deliver the expected improvements in social indicators, it needs to be sustained over time. It is therefore essential for Chile to maintain its commitment to the structural budget surplus rule, so as to ensure the sustainability of the planned increases in social spending over the longer term.
Expenditure on education and health care(1)
In per cent of GDP
1. The solid horizontal lines refer to the OECD average, excluding the emerging‑market economies within the OECD area (Czech Republic, Hungary, Korea, Mexico, Poland, Slovak Republic and Turkey). The dashed lines refer to the average of the emerging‑market economies within the OECD area and the non‑OECD countries included in the sample.
2. Refers to 2002, except for Canada refers to 2003.
3. Refers to 2005.
Source: OECD (2005, 2006) and World Health Organisation and OECD calculations.
The hike in government funded social services needs to be cost effective to yield commensurate improvements in social outcomes
The planned increase in social spending will need to be carried out in a cost efficient manner to make sure that it yields commensurate improvements in social outcomes. In education, the voucher scheme introduced in the early 1980s to finance municipal provision has yet to enhance performance through increased competition among schools and to narrow the quality differentials that currently exist among public, subsidised private and fully private schools. The fact that performance varies predominantly across, rather than within, the three types of schools is in contrast with the experience of OECD countries, where differences in performance occur mainly within, rather than across, schools. A differentiated voucher scheme is being designed to increase funding for the schools catering for students from disadvantaged social backgrounds and to enhance managerial autonomy for the best performing schools. In health care, despite recent reform, private insurers still have considerable room for cream skimming; as a result, risk is concentrated within the public insurance and service delivery systems, which places a financial burden on the public budget. The range of pathologies covered by AUGE is being broadened. In the case of housing, the quantitative deficit is being reduced, but the quality of subsidised housing needs to be enhanced. Policy effort is re focusing the subsidy programme towards the lowest income quintile of the population. To tackle remaining deficiencies in the provision of social services, efforts will need to be stepped up to: i) narrow the disparities in performance that currently exist among schools with students from varying backgrounds through the differentiated voucher scheme and additional initiatives to improve the quality of teaching and management; ii) improve risk sharing among private and public health insurers, while increasing the coverage of health insurance to a broader variety of pathologies through AUGE; and iii) continue to close the housing deficit, while enhancing the quality of subsidised housing units and their surrounding neighbourhoods for the poorest segments of society.
PISA scores and education spending per pupil in secondary education(1)
in OECD and non‑OECD countries, 2003
1. PISA scores refer to the mathematical literacy test results.
Source: OECD (2000, 2003b, 2003c, 2005, 2006), World Health Organisation and OECD calculations.
How to obtain this publication
The Policy Brief (pdf format) can be downloaded in English or in Spanish. It contains the OECD assessment and recommendations.The complete edition of the Economic survey of Chile 2007 is available from:
- SourceOECD for subscribing institutions and many libraries
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OLISnet, under "Publication Locator", for government officials with accounts ( subscribe)
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Additional information
For further information please contact the Chile Desk at the OECD Economics Department at eco.survey@oecd.org. The OECD Secretariat's report was prepared by Luiz de Mello and Diego Moccero under the supervision of Peter Jarrett. Research assistance was provided by Anne Legendre.
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