Chile irons out market wrinkles

December 8, 1995

What comes after Chicago? This question dogs higher education - and indeed other sectors - in Chile as the country rebuilds democracy after the twin shocks of Allende's failed Marxist experiment and Pinochet's ruthless military dictatorship.

When the Allende regime was overthrown in 1973, Pinochet, lacking an economic policy of his own, gave carte blanche to the "Chicago boys", academic economists trained at the University of Chicago during nearly 40 years of formal exchanges with the Universidad Cat"lica de Chile, the country's second major university. Favour at home gave the Chicago link new life: in the 1970s the next generation also received its economic training there.

The Chicago boys, backed by a military regime determined to quash protest, were able over 16 years to conduct one of the biggest economic experiments ever. Discomfiting as it may be to those who prefer liberal democracy, the economic results, whether because of the theory or the consistency of its application, benefitted the economy. It is now humming along at around 7 per cent annual growth in gross domestic product.

When the military regime was forced to withdraw - at least overtly - in 1989, there was no move to reverse the Chicago experiment. But now there is growing concern both in government and academic circles.

The Chicago toolkit, so comprehensive in the switch to the free market, is proving less useful when dealing with the afermath. How is corruption to be prevented in the free market? How are markets to be regulated to protect consumers? What is to be done to ameliorate the harsh social consequences of privatising so many public services? How can a political and administrative class be reconstructed after years of dictatorship?

Such concerns ensured an interested reception for a recent delegation from the London School of Economics, visiting Chile to see if time-honoured links might be refurbished and strengthened now that democracy is being restored. They found a wish to counterbalance the overwhelming influence of the United States in general and Chicago in particular - though without doing anything dramatic.

Nor is post-Chicago angst just an academic matter. The politicians responsible for universities have their own worries. Pinochet initially put generals in charge of Chile's eight universities (with the exception of the Universidad Cat"lica whose rector is appointed by the Holy See), abolishing staff and student representation.

Then in 1980 it Chicagoised the system. The market was opened up to new private universities, professional and technical schools with only rudimentary quality control. The market itself was supposed to ensure quality. Fees were imposed in the old universities, state subsidies were sharply cut and the big federal universities, the Universidad de Chile and the Universidad Tecnica del Estado (later Universidad de Santiago de Chile), were broken up to form new regional universities. All universities were to become self-supporting.

The results were dramatic. By 1990 there were 310 higher education institutions, only 22 of them publicly funded. Enrolments increased by 166 per cent between 1980 and 1990 (from 117,000 to 250,000 in 1990) and have risen since to 312,000 by 1993 giving about a 20 per cent participation rate. Most expansion was in professional institutes and technical training centres, not universities.

The cost was almost entirely met from private sources with students in the new institutions paying full fees and students in the old universities paying fees to cover about 22 per cent of costs. Public spending on higher education, direct and indirect, including loans, increased by only 50 per cent between 1980 and 1990. Direct subsidies were halved.

This unrestrained market growth gave the incoming democratic government a headache. Access to higher education (of a sort) was easy if you had money but the proportion of students from poorer homes remained very small. This they have been able to tackle. Since 1990 public spending has risen particularly to provide 5,000 scholarships a year for poorer students and special funding for research. Where in 1990 only 22 higher education institutions got public funding, 1 did so by 1993. Institutions compete for the best students who carry subsidy with them.

But dishing out cash is one thing, quality control another. Completion rates in publicly funded universities average over nine years for what is meant to be a five-year degree programme. (The remote Universidad Cat"lica del Norte averaged 19.9 years, and even the Universidad de Chile clocked 9.7.) Quality control in the private sector is minimal, exercised either through established universities for ten years or, but only since 1990, by accreditation from a Higher Council for Education. Some of the new universities are becoming well established especially as business schools, but many institutions are very small and of uncertain quality. A couple have gone broke. A couple have had accreditation refused recently. All tend to concentrate on subjects that are cheap to teach like business studies and law.

Jose Joaquin Brunner, once education minister now minister for press and communications and President Frei's close advisor, is concerned. Chairman of a commission to examine the reform of higher education in 1993, he has proposed legislation to improve quality assurance.

This would establish a National Council for Higher Education appointed in part by universities, in part by government. He describes it as "a public, autonomous body that will connect higher education insitutions with the Government, manage the accreditation and evaluation procedures and marginally intervene in the distribution of public funds." Institutions would also be obliged to supply the government with information "to produce market transparency and foster accountability." It would also reform the loan scheme.

This legislation is stuck. The old universities want the new regulations confined to new universities. New universities oppose mandatory accreditation. Some people see the reforms as reminiscent of the military regime, giving government too much control. Others dislike the implied approval of the market-driven model. Mr Brunner is frustrated - and increasingly interested in systems for quality control adopted in Europe.

In higher education as elsewhere the Chicago model does not seem helpful when it comes to ironing out the wrinkles in a free market.

Please login or register to read this article.

Register to continue

Get a month's unlimited access to THE content online. Just register and complete your career summary.

Registration is free and only takes a moment. Once registered you can read a total of 3 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments

Have your say

Log in or register to post comments