COUNTRY BRIEF: CHILE

CHILE: BASIC STATS

• Population 16.9 million• GNP/capita 8,350 USD• Poverty rate 13.7 %

STRATEGIES FOR ECONOMIC DEVELOPMENT

• The Liberal Era (1880s-1920s)• Import-Substitution Industrialization

(1930s-1970s)• The Socialist Alternative (1950s-1980s)• Neoliberalism (1980s-present)

– The “new Left”– ALBA

CHILE: OVERVIEW• Natural Resource: Minerals

– Nitrates– Copper– Sparse migration

• Export-Import Growth– Pacific Coast connections– Copper as key– Political democracy (of sorts)

• Democracy and Military Rule– Party politics (1940s-70s)– Socialism via democracy? Salvador Allende (1970-73)– The Pinochet regime (1973-1989)

• Neoliberal Politics and Policy– Democracy (1990-present)– Economic uncertainty + reliance on exports (again)

KEY QUESTIONS

• 1. Why such a brutal (and durable) dictatorship under Pinochet?

• 2. Why such a vibrant democracy now?

MILITARY RULE• Perception of threat:

– Tradition of labor mobilization– Links to political parties

• Left = socialist, communist• Center = Christian Democracy• Right = National Party (PN)

– Cold War mentality, doctrines of “national security”

– Support from the United States

• The Dictatorial Solution– Military as bulwark of patriotism– Weakness of conservative institutions– Need to purge subversive elements– Reconstruction of society (and economy)– Pinochet in command– Constitution of 1980

• The Stunning Plebiscite (1988)– Victory of “No” (55-43 percent)– Bargaining and guarantees– Protections for the “right”

DEMOCRACY RESTORED• Human rights:

– “Truth and Reconciliation” commission– 1998 arrest of Pinochet

• Economics:– A “gift of the dictator”– Consensus on free-market policies

• Politics:– Restoration of “golden age”– Formation of Concertación (center-left)

INSTITUTIONAL FEATURES• Executive

– MRO– Four-year terms (renewable after one interim term)

• Legislative– Bicameral structure (Chamber of Deputies = 120 members,

Senate = 38)– Voting rules to help the right (“binomial system”)– Located in Valparaíso– Weak resources, but increasing authority

• Judiciary– 20 justices on Supreme Court, tenure for life– Court creates list of 5, President selects one, two-thirds Senate

confirms

QUALITIES OF CHILEAN DEMOCRACY

• One of only three countries to receive perfect scores from Freedom House (along with Costa Rica and Uruguay)

• Top ranking on corruption from Transparency International (#22 in world)

• Top ranking on rule of law according to World Bank (+1.25, range +- 2.50)

DEMOCRATIC PRESIDENTSCenter-Left alliance: Concertación• Patricio Aylwin (1990-94)• Eduardo Frei (1994-2000)• Ricardo Lagos (2000-06)• Michelle Bachelet (2006-10)

Right: • Sebastián Piñera (2010- )

THE WASHINGTON CONSENSUS

• Reducing the role of the state:– Less regulation– Less public ownership

• Liberalizing trade:– Reducing tariffs and quotas = less protection– Seeking commercial partners

• Promoting private enterprise:– Privatization– Foreign investment

POLICIES IN CHILE• Trade liberalization

– Unilateral +– FTAs– Diversification of destinations

• Privatization• Stability (low inflation)• Foreign investment• Poverty and inequality

EXPORTS

• Products: copper, fruits and nuts, fish and seafood, wood (and wine)

• Partners (2009):– China 16.5 %– USA 11.3– Japan 9.1– South Korea 6.5– Brazil 4.6– Mexico 4.1

INEQUALITY

• Mexico .461• Argentina .513• Chile .549• Brazil .570

• USA .408

Thus is born a “poster child”…