1 In estimating the national housing deficit of any country one encounters a number of statistical and conceptual difficulties. In the Ten Year Development Plan of the Industrial Development Corporation of Chile, presented in 1959 for the decade 1961-1970, an estimated increase of 72,000 housing units a year was recommended to cover the housing deficit plus population growth. If only half of the deficit were to be constructed in the decade, 59,000 units was the estimated need. The Frei government began its term in 1964 with the promise to construct at the rate of 60,000 units a year. (Cf. Speech by Modesto Collado, first Minister of Housing and Urbanism on 4 December 1964 in El Mercurio, 5 December 1964.)

2 Unless otherwise qualified, “housing” refers to new housing investment, including investment in infrastructure and community services related to the construction of housing units. Neither does “housing” necessarily refer to definitive homes. It can also include housing solutions, i.e., the improvement of family participation in new housing services. In fact, the Frei government found it necessary in 1967 to relate its goal of 360,000 homes in six years not to completed structures but to housing solutions. Cf. Ministerio de Vivienda y Urbanismo, Documento Antecedente Mensaje Presidencial, 21 de mayo de 1967.

3 Cf. note 2 above.

4 Total investment in the housing sector is particularly difficult to measure because of the significant amount of capital formation by the popular sector which is not included in the national income accounts. If one can distinguish between public sector construction, private sector construction and popular sector construction, then the latter is probably the most significant producer of housing units even though its total investment may not be impressive. (For a discussion of this distinction see Frankenhoff, Charles A., “The Economic Role of Housing in Developing Economy,” in Frankenhoff, Charles, ed., Housing Policy for a Developing Latin Economy, Puerto Rico, 1966.)Google Scholar

The measurement of real investment is made difficult by the high rate of inflation in Chile, a rate which has been even more striking in the area of rising construction costs. In terms of 1965 escudos, the national income accounts for Chile show a total construction investment of 1.8 billion escudos in 1963, 1.7 billion escudos in 1964, 1.8 billion escudos in 1965, and 1.7 billion escudos in 1966. Oficina de Planificación Nacional, Cuentas Nacionales de Chile, 1960-66, Santiago de Chile, 1967.

5 The Public Housing Corporation (CORVI) was established in 1953 by D.F.L. 285.

6 The Ministry of Housing and Urbanism was organized under Law No. 16,391 in 1965.

7 The savings and loan system of Chile under its central bank, the Caja Central, has continued to lead an institutional existence apart from the Ministry of Housing and Urbanism even though it receives a substantial part of its resources from the ministry. This practical autonomy results from the high proportion of foreign assistance which it has received, especially from USAID and from the Inter-American Development Bank. It also results from the fact that the clientele of the savings and loan system is of a higher economic level than those of the Ministry of Housing.

8 Cf. note 4 above.

9 The weakness of the housing deficit approach is well analyzed by John Turner, “A New View of the Housing Deficit,” in Frankenhoff, ed., Housing Policy, 1966. The analysis relates housing needs to the socioeconomic capacity of the family rather than to some minimum standard of housing services established by the government. It also insists upon a process view of family housing needs rather than a static view. For an analysis of the housing deficit as an instrument of housing policy, see Frankenhoff, Charles, Hacia una política habitacional popular: El caso de Chile (Santiago de Chile, 1969), chapter II.Google Scholar

10 Cf. note 2 above.

11 Cf. Charles Frankehoff, Jorge Guzmán, La contribución económica de la nueva inversión habitacional en la zona La Serena-Coquimbo: Un estudio preliminar, No. 27, Ministerio de la Vivienda y Urbanismo, Santiago de Chile, 1969.

12 “In theory” because the private sector is not exempt from state and local taxes as is the Public Housing Corporation. Neither can the private sector expropriate land to construct low cost housing.

13 See Frankenhoff, Hacia una política habitacional, ch. IX.

14 Cf. Oficina de Planificación Nacional, Cuentas Nacionales (Santiago de Chile, 1967).

15 Cf. note 9 above.

16 Recently a private construction firm in Temuco undertook, with the approval of the Public Housing Services Corporation (CORHABIT), to buy land, urbanize it, and build highly acceptable housing within the cost provisions of Plan 4 of PAP. Three hundred homes were finished and sold. Six hundred more are planned.

17 Frankenhoff, La Serena-Coquimbo, Tables 1, 10, 11.

18 The capital-output ratio of new housing investment is generally accepted to be among the highest with the result that the economists tend to assign such investment a low economic priority. Together with other housing economists the author feels that the capital-output ratio has been badly applied to the housing investment area. Cf. Charles, Frankenhoff, Housing and the Capital-Output Ratio in a Developing Economy, United Nations Economic Commission, Santiago de Chile, 1965.Google Scholar

19 A decree was issued in late 1968 by the president through the Ministry of Housing and Urbanism to remedy this situation, but there has been no real effort of implementation. By tradition in Chile a family can invade a piece of land, erect a shack overnight, place the national banner on it, and feel relatively secure.