Numerous economists argue that capitalism and free markets are the perfect opportunity for developing countries to increase their living standards. However, just until recently, economist have failed to see the whole scope of how things work, because their various theories and analysis consider living beings that do not existꓽ the Homo economicus, the theoretical rational human being who always tries to maximize its profits.

I am not trying to say that these models have not worked to solve issues that affect real people. Nonetheless, when aiming to explain poverty in highly liberalized economies, this focus seems to not work quite well.

A holistic focus should aim to include factors such as corruption and weak institutions. In many poor countries, a corrupt government and foreign companies often collude to maximize their own profits. This explains high GDP growth, but also how unequally the wealth is distributed among the population.

In Chile, neoliberal economic policies were implemented during the dictature of Pinochet. While this brought about substantial changes in infrastructure and the services available to the population, it did not provoke the changes that the iconic Chicago boys expected. While capital did flow into the country, the lack of free institutions and the prevailing centralization of power hindered the growth of the purchasing power of the average Chilean.

On account of all what has been said, I believe that it is just about time for economists to start developing innovative fields that consider other factors that traditional economics does not take into account, just like behavioral economics is now doing.