Exploratory analysis of the economic effects of the establishment of new regions in Chile and diagnosis of the case of the province of Nuble

Abstract

The subdivision of the country into new regions was enforced by the Chilean “Constitutional Organic Quorum” law, which was enacted in 2005. The enforcement of this law increased the interest of different geographic areas such as Arica, Valdivia and Ñuble to turn into regions. Nevertheless, only the first two provinces turned into regions in 2007. This paper analyses economic and social effects of the Political and Administrative Division (DPA) of the new regions of “Arica y Parinacota” (i.e., Arica) and “Los Ríos” (i.e., Valdivia). Specifically, we evaluate before-and-after effects of the administrative change by means of descriptive and inferential statistical analysis of relevant variables of the Chilean Socioeconomic Characterization Survey (CASEN), during the period (2000-2013). Although Ñuble province has always had a lower average income in comparison with the two new regions, the gap among them increases significantly between the study periods (i.e., from 2000-2007 to 2007-2013). While in the first period the average difference reached $47 510, this figure is doubled ($91 527) after the creation of the new regions.