The American Dream Moves South

FEATURES | November 7, 2014     

The American Dream Moves South Why Chile has become the most important country in the Americas for Latin American migrants

When Chilean democracy was restored in 1990, one in every 125 of the country’s residents was foreign born. Last year, with Chile standing as Latin America’s most developed nation, one in every 44 Chilean residents was foreign born. The huge rise in immigrants reflects Chile’s economic rise as well as its democratic consolidation. Though the US continues to be the country of choice for most Latin Americans who migrate – and Canada second – the difficulties associated with pursuing the Sueño Americano (American Dream) are leading a growing number of Latin Americans to look for an alternative in the increasingly attractive Sueño Chileno (Chilean Dream).

After decades during which the road to a better life seemed inevitably linked with migrating outside the region, recent economic progress in some countries – Chile, Colombia, Ecuador, Panama and Peru – has made migration within Latin America an increasingly attractive option for those who look beyond their national borders for upward mobility. Of all these countries, it is Chile that has become the destination of choice for a growing number of Latin American migrants. The signalling effect for the rest of the region should not be underestimated: as people in other Latin American countries make Chile their new home, the country’s market-friendly economic policies and its focus on strengthening democratic institutions are not going unnoticed in other regional capitals. Unlike the American Dream, often seen as culturally distant from, or otherwise foreign to, the realities of the region, the growing footprint of a Sueño Chileno has many nationals of neighbouring countries reasoning that if Chile can enter the club of industrialized countries, so too can their own countries.

Migrants typically follow economic opportunity. They also take into account the difficulties of entering and integrating into countries with greater economic opportunities than their homeland. Historically, as Latin American countries have suffered from periods of rapid, pro-cyclical economic growth followed by periods of stagnation or outright recession or bust, migratory waves have not been permanent or otherwise stable in the region. As late as the 19th century, mining booms attracted migrants to Brazil, Peru and northern Chile. Argentina and southern Brazil became destinations of choice for millions of Europeans in the late 19th and early 20th centuries due to rapid growth produced by their entry into international markets as a result of improved transportation networks – to wit, railroads to connect the agriculturally rich areas with port cities, and engine-powered vessels to transport goods from the Americas to Europe. Subsequent economic crises slowed and even reversed these migration waves. More recently, a period of export-oriented growth in the region, induced by the high demand for raw materials and agricultural goods from China and elsewhere in Asia, has not resulted in renewed interest for migratory waves from the rest of the world to Latin America. But within Latin America proper, people are increasingly mobile and migratory waves are increasing.

In 1990, poverty was widespread in Chile. Four in every 10 Chileans lived below the poverty line. Chile was among the most unequal countries in the world, with a Gini coefficient of 56.2 (with 100 signifying perfect income inequality). In addition to facing mounting demands for poverty reduction programmes and social subsidies, the new democratic government was constrained by an institutional straightjacket left by the outgoing military dictatorship. The former strongman, Augusto Pinochet (1973-1990), who retained the position of commander-in-chief of the army until 1998, was a constant reminder of the limited power of the new democratically elected government of the centre-left Concertacion coalition.

With its pragmatic and moderate approach – democracy to the extent possible, as it came to be known – the new government focussed on building democratic institutions, expanding political and civil liberties, targeting the poorest with social spending, and promoting economic development to help millions escape poverty through formal employment. The strategy eventually proved successful as the country has, over the past two and a half decades, been the fastest growing nation in Latin America. The strategy also proved politically rewarding for the Concertacion, which won four consecutive presidential elections, earning the record for the longest serving democratic coalition in the history of Latin America. By 2010, when the Concertacion lost its first election, poverty had declined to less than 15 percent. GDP per capita had grown threefold (controlling for inflation). Even inequality had decreased to 52.1 – still high by international standards, but no small feat given that inequality normally increases in countries undergoing rapid economic growth.

A mix of market-friendly economic policies, an export promotion strategy (with a focus on signing free-trade agreements with countries all over the world), and an aggressive posture on attracting foreign investment for mining and funding public infrastructure transformed Chile into an engine of economic growth as well as a role model for the rest of the region. Earmarked social spending helped to bring millions into the middle class. Educational coverage expanded drastically: well over half of university-aged men and women today go on to tertiary education. Though the cost of education is high – as underlined by two waves of student protests in 2006 and 2011 – returns to higher education continue to make it attractive to get a degree.

As with many other middle income countries (Chile is arguably caught in a middle income trap), Chile faces complex challenges in its quest to complete the transition to become Latin America’s first industrialized country. Its relatively low levels of corruption and effective government services are not sufficient to make up for the inadequate provision of public services. Privatization of education, health, transportation and infrastructure has expanded access and coverage, but weak regulatory frameworks have left consumers’ rights imperfectly protected.

Polls repeatedly show that Chileans are very optimistic about the future of the country and about their own personal future prospects. In the monthly reports on economic outlook issued by the polling company Adimark, Chileans have consistently shown bullish attitudes. In the past five years, an average of 55 percent of Chileans have fancied that the economic situation will improve in the coming year. Because the country has seen so much growth over the past two decades, Chileans have high expectations that growth will continue, even if a majority of them also paradoxically believe that others will benefit more than their own families from expanded opportunities.

Macroeconomic data justify the optimism. In 1990, Chile (US$4,388) had a lower GDP per capita (in purchasing power parity terms) than several Latin American neighbours: Venezuela (US$9,418), Argentina (US$7,462), Brazil (US$6,475), Uruguay (US$6,229), Mexico (US$5,993) and Colombia (US$5,021). Today, Chile has the highest GDP per capita in Latin America (US$21,911). Even when compared to the rest of the world, Chile has an impressive record. In 1990, Chile’s GDP per capita was 39.8 percent that of Portugal, and 18.3 percent that of the US. In 2013, it was at 85 percent and 41 percent, respectively. If per-capita national output grows at the average rate of the past 10 years, in less than a decade Chile will have surpassed Portugal. Of course, sustaining such growth will be difficult – the economy has expanded 4.9 times since 1990, but will have expanded by barely two percent in 2014 – and future economic prospects will depend on higher levels of education and higher productivity among younger cohorts.

Rapid economic growth has had the effect of reducing population growth. In fact, there has been no better birth control mechanism in the history of the country than its sustained economic expansion over the past two decades. After democracy was restored, the average number of children per woman decreased from 2.4 in 1990 to 1.8 in 2005. As the former poor entered the middle class, women waited longer before having children and young couples chose to have fewer children. The slower population growth made it easier for Santiago to expand social services. Moreover, since the pension system was modified from the traditional pay-as-you go approach to individual savings retirement accounts, an ageing population has not presented the same challenges that it does in Western European countries.

The increase in educational levels among younger Chileans has led to growing demand for low-skilled workers – particularly for household work. From the mid-1990s, migrants from Peru began to fill positions previously taken by Chileans migrating to cities from rural areas. Indeed, the arrival of Peruvian nannies was early evidence that Chile was turning into a destination for immigrants from elsewhere in Latin America.

Other migratory waves soon followed. After the 2001 economic crisis in Argentina, many highly skilled professionals crossed the Andes to find work in Chile. Having already been positively impacted by the arrival of world-famous Peruvian food, the restaurant industry benefited from the influx of Argentine hosts and hostesses, a group better trained than their Chilean counterparts.

In recent years, immigrants have settled in cities and towns beyond Santiago. The active copper mining sector in northern Chile led to double-digit population growth in cities like Iquique and Antofagasta. Bolivians have crossed the border to work in Arica and Antofagasta. But the flows have not been restricted to migrants from neighbouring countries: Colombians and Ecuadorians too have moved to northern mining towns in Chile looking for opportunities. There are now non-stop daily flights from Antofagasta to Cali in Colombia and Santa Cruz in Bolivia.

In 1990, there were 13.2 million people living in Chile – among them 107,501 foreigners, or 0.8 percent of the national population. By 2013, the population had increased to 17.6 million. This 33 percent increase over 25 years is lower than the Latin American average and just above that of the US. In that same period, however, the foreign-born population in Chile jumped to 398,251, or 2.3 percent of the national population. Bref, the foreign-born population grew nine times faster than the overall population. This makes Chile, among Latin American countries, tied with Ecuador (also 2.3 percent) and ranked just below Argentina (4.5 percent), Venezuela (3.9 percent) and Paraguay (2.7 percent) for the percentage of its population that is foreign born. Only Ecuador and Chile, however, among all of these countries, have not seen their foreign-born populations decline over the past two decades. Argentina and Venezuela, the two countries that were favoured destinations for intra-Latin American migration in the second half of the 20th century, have gone through periods of extended economic and political turmoil.

In Ecuador, most of the newcomers are children of Ecuadorian migrants who returned en masse from Spain and other European countries after the 2008 economic crisis. While Ecuador has experienced rapid economic development, its democratic institutions still remain weak, and the country has not to date emerged as a destination of choice for internal migration in Latin America.

The two largest Latin American countries, Brazil and Mexico, have historically had notoriously low levels of immigration. In Brazil, the language barrier makes it less attractive for Spanish-speaking people to migrate. The foreign-born population in Brazil has declined from 0.5 percent in 1990 to 0.3 percent in 2013. Mexico, for its part, is famously the largest source of immigrants to the US. The foreign-born population in Mexico has increased marginally from 0.8 percent in 1990 to 0.9 percent in 2013. And yet, in the aggregate, both Mexico and Brazil have also failed to emerge as key destination countries for Latin American migrants because of their slow economic growth over the last decade.

Canada and the US continue to be the preferred destination countries in the Americas for migrants. In Canada, the foreign-born population increased from 16.3 percent to 20.7 percent between 1990 and 2013. The US experienced faster growth in the same period (9.1 percent to 14.2 percent), although the foreign-born population of the US continues to represent a considerably smaller share of the population than that of Canada. Having said this, entry into both countries has become increasingly difficult for people from Latin America. Reduced access to visas and work permits forces many immigrants to break the law to enter the country. Crossing the border illegally – especially via Mexico, the most common route for Latin Americans entering the US illegally – has also become more dangerous and more costly. Migration within Latin America is therefore becoming an ever more attractive alternative.

It stands to reason, naturally, that the large influx of newcomers to Chile presents both opportunities and challenges. In general, immigrants tend to be industrious people who are eager to make use of the opportunities available to them. They are a potential engine for future growth – inherently entrepreneurial and risk-taking. At the same time, immigration also poses challenges for receiving countries. In communities with high numbers of migrants, some people will feel threatened and might react negatively if they perceive that migrants are taking jobs away from them. Government programmes designed for the lowest income population will often have to be expanded to migrants looking for educational, health and housing opportunities. Many migrants, for their part, are ultimately interested in returning to their native countries and will therefore spend less of their earnings as they send remittances back home, or save to return to their homeland with money to invest.

When newcomers do not speak the language or have cultural values that are very different from those of the host population, integration does not occur automatically. Religious differences certainly complicate integration challenges. And yet none of these problems seems to be present in Chile today. Most new immigrants are Spanish-speaking and come from Latin American countries with similar histories, cultural values and even religious traditions. Their integration is generally regarded as far smoother than would be the case in the US or Canada.

Chile has, in many senses, ventured into unchartered territory for Latin American countries. Since no other regional country has reached the same level of economic and democratic development, its challenges are new. As it moves from an export-oriented to a value-added economic model, the concomitant challenge of dealing with immigration and profiting from its new position as a primary destination country for many Latin American immigrants may be equally as important in helping Chile overcome the obstacles that separate the region’s most developed nation from the clubs of the world’s most developed nations.

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Patricio Navia is Full Professor of Political Science at Universidad Diego Portales in Chile, and Master Teacher of Global Liberal Studies at New York University.

(Illustration: Sam Brewster)

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