Urban issues have emerged as key features on national policy agendas. The importance of cities and their corresponding metropolitan areas to the national economy makes them critical players in the international marketplace. This in turn leads governments to renew their support to cities. At a time of increasing globalisation and international competition for investment, urban regions have become the focus of a wide range of public interventions. Throughout OECD member countries, these policies encompass plans to solve traditional urban problems – urban sprawl, abandoned districts and poverty – and newer issues such as competitiveness strategy, city marketing, environmental sustainability and innovation.

Chile is a highly urbanised country. Almost 77% of its population lives in a metropolitan or other functional urban area. At the same time, its cities are quite heterogeneous in size, composition and resource capacity. The country has grown successfully and urbanised rapidly, despite the lack of a unified urban policy. Today, Chile finds it has outgrown many of the mechanisms and instruments that have hitherto framed and guided urban development and management, and it is actively evaluating policy and governance options suitable for constructing a more dynamic and integrated approach to urbanism.

The quality of life in Chile has improved significantly over the past decades, and in general, Chileans report greater satisfaction with their lives than the OECD average. However, Chile ranks lower than many other OECD members on a variety of urban-related topics including income, housing, jobs and the environment. In 2010, approximately 15.2 million people lived in Chile’s urban areas, representing about 89% of the population; and it is estimated that by 2025, the urban population will constitute over 90% of the total. This chapter examines economic and socio-economic trends in Chile’s urban areas, and raises the key issues and challenges facing its cities and metropolitan regions using the OECD methodology establishing functional urban areas (FUAs). Among the main challenges identified are population growth, mounting inequality, low levels of housing stock despite major improvements in access to housing, and environmental concerns, particularly with respect to air quality and access to green space.

Chile has undergone significant transformation in the past three decades, including growth in its GDP, population levels and urbanisation. This growth has been a key factor in the county’s success. Chile’s urban and metropolitan development practices have traditionally been sector driven, and today the need for well-integrated approaches to urbanism are increasingly recognised among urban policy makers. This chapter makes the case for such an approach to urban development and management as a means to help reduce inequalities within and between urban areas. It provides an overview of the policy and planning frameworks governing urban development in Chile, and analyses four policy areas with significant implications for national urban programming: land use and zoning, housing, public transport and the environment, particularly with respect to air pollution, green space and the risk of natural hazards.

Chile’s urban governance architecture has provided a solid framework for urban development, but it may no longer be adequate to meet the pressures of continued rapid urbanisation. Improving Chile’s urban outcomes will require adjusting its urban governance framework, including building the capacity to bring central and sub-national, public and private actors together to build a whole-of-city approach to urban initiatives. This chapter focuses on Chile’s urban administrative structures, recent sub-national reforms and sub-national financing practices. It analyses the administrative and institutional fragmentation affecting urban governance and explores institutionally based governance models, including those for metropolitan areas. Finally, it examines mechanisms to reinforce strategic planning and public service delivery capacity based on the country’s own context and international experience.