Economic Policy and Latin American Culture: Is a Virtuous Circle Possible?

Abstract

Economic development is positively related to the presence of favourable cultural attitudes (‘progressive values’): the radius of trust, the ethical system, the nature of the exercise of authority, and attitudes to work, savings, and innovation. This article explores the possibility of a virtuous circle linking economic policies and Latin American cultural attitudes, mostly using examples from Chile since the mid 1980s. The link from culture to development emerges from education, economic awareness and professional economics, and the traditional culture and spontaneous cultural change. The link from economic policy to culture is represented by developments in macroeconomics and the financial sector, industrial protection and free trade, and female participation in the labour market. The role of poverty and inequality, and the effectiveness of exhortation versus incentives, and of concentrating the effort on several specific groups, are also examined.