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Volume 59 / Social Sciences

ECONOMICS: CHILE


MARKOS J. MAMALAKIS, Professor of Economics, University of Wisconsin-Milwaukee


IN MARCH 2000, RICARDO LAGOS, the well-known, moderate, and respected Socialist and prolific economist, became the third democratically elected president of Chile since the end of the Pinochet dictatorship in 1990. Notwithstanding, economic freedom—the key legacy of the Pinochet era of authoritarian neoliberalism—retains its primary position within the new democratic constitutional order. Political and social freedoms, as well as equality and equity, have increasingly gained their rightful place alongside economic freedom in the galaxy of supreme political virtues throughout the enlightened democratic presidencies of Patricio Aylwin (1990–94), Eduardo Frei (1994–2000), and Lagos.

Chile's spectacular economic boom of the 1990s gave way to a downturn in 1999, when the rate of GDP growth fell by -1.1 percent and unemployment rose to 9.7 percent. Inflation, however, was remarkably low at 2.3 percent. While not immune to global downturns and external crises, by the beginning of the 21st century Chile had reached levels of economic, social, and political progress and stability that enabled the country to avoid the chaos, instability, and/or recurrent extreme turbulence afflicting other Latin American countries at the same time. If Chile can sustain and extend the remarkable post-1973 economic reforms, which have not only promoted fundamental freedoms, but have also sought equality and equity in the provision of semipublic and collective services, it may emerge as the only South American country with the economic qualifications required for entry into NAFTA.

Chile continues to experience a systematic improvement in the sophistication and quality of its economic studies. Although there exists a wide spectrum of publication sources, three main venues stand out in quantitative and qualitative terms: Cuadernos de Economía, published by the Catholic University in a neoclassical tradition; CEPAL Review, with its predominantly neostructuralist orientation; and Estudios Públicos, published by the Centro de Estudios Públicos, a libertarian think tank. The polemic pamphlet literature of the pre-Allende years is almost extinct.

This chapter includes an impressive collection of first-rate articles and books dealing with such mainstream topics as the efficiency of macroeconomic monetary and fiscal policies in achieving the goals of productivity growth, full employment, and price stability; the evolution and impact of regulatory policies on trade and labor and capital markets; the sources and trends of poverty and inequality; the evolution and efficiency of the private pension and social security system; and project evaluation, financial liberalization, and modernization of industry, agriculture, mining and services and so forth.

The neoclassical studies of production, growth, and accumulation of physical and human capital are of cutting-edge quality. The studies of relative and factoral income distribution, poverty, and inequality are, however, still at an embryonic stage. As a recent World Bank report demonstrates, we are just beginning to understand the complex nature of poverty. Furthermore, our understanding of the measures, nature, and causes of social and economic mobility is extremely limited, largely due to lack of longitudinal statistical information. There exists a strong need for research on the role of the state as an owner of the means of production as compared to its role as general government producing collective services; and on the increased role of nonprofit institutions such as NGOs, especially in producing semipublic services.

Highly welcome are novel, path-breaking studies on nontraditional topics or new issues such as underinvestment in new technologies, corruption, the role of culture, feminization of agroindustrial labor, discrimination against women in poor households, communitarianism, child labor, marine industrial fisheries and the tragedy of commons, and salmon aquaculture.

Review of the literature reveals a convergence towards a consensus that views freedom and equality as complementary rather than competitive supreme political virtues, which are collectively producible by general government. At the dawn of the third millennium, Chile is experiencing a mild crisis of faith, a cyclical pessimism, a slowdown in productivity growth, increased environmental challenges, rising competition abroad, drug addiction, and weakening of family values. Generally, libertarians advocate increased freedom, privatization, and greater participation in global exchange. They also warn against governmental preferential treatment for powerful labor groups, which, they argue, promotes inequalities. Neostructuralists, socialists, and communists advocate an increased role of government to achieve equality and equity through egalitarian distribution of health, education, and welfare, improved protection of the environment and workers, and, for some, even reduced economic freedoms. Chilean underclasses have experienced grave social injustices even before independence in the form of limited or no access to basic economic freedoms and unequal as well as inadequate shares of semipublic and collective services. Continued productivity and welfare growth require that economic, political, and social freedoms be enjoyed by all, and that especially semipublic and collective services be distributed equally, including those historically suffering from exclusion.

All works reviewed here make lasting contributions to our understanding of Chilean economic development. The following studies stand out in terms of their unique quality: 1) the pioneering study by Barrientos et al. documents the feminization of the agroindustrial labor force in the aftermath of the post-1973 trade liberalization (item #bi2001001623#); 2) the impressive study by Fontaine examines the remarkable contribution of project evaluation training to the radical, post-1973 institutional transformation (item #bi 97016075#); 3) Barton critically examines the impact of salmon aquaculture on the southern regions of Chile (item #bi 97017955#); 4) Hojman's superb article highlights the contribution of culture to the Chilean economic miracle (item #bi 99007410#); 6) Foxley thoroughly examines the fundamental continuity and strengthening of orthodox, freedom-based economic policies during the Pinochet and democratic periods (items #bi 98010161# and #bi2001001639#); and 7) Meller provides a superb, long-term historical examination of Chilean economic development (item #bi 98010169#).


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