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WEEKLY NEWSLETTER
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Chile
Index
For years, opponents of the Pinochet government had
argued that
its economic program was based on ideas alien to the
Chilean
tradition. In early 1990, analysts, scholars,
stockbrokers, and
politicians throughout the world wondered if the new
democratic
government of President Aylwin would maintain some, or for
that
matter any, of the most important aspects of the military
government's market-oriented policies, or if the CPD
government
would reform the system along the lines of the decade-long
criticisms of the opposition. What made this question
particularly
interesting was that at the time of the restoration of
democracy,
Chile was considered by many, including international
institutions
such as the World Bank and the IMF, as a premier example
of the way
the adjustment process after the debt crisis should be
carried out.
A number of analysts asked themselves how the advent of
democracy
would affect Chile's economic policy. In particular,
analysts were
concerned about the new government's attitude toward the
free price
system and Chile's new openness to international
competition.
Regarding price competition, the Aylwin program's
position was
stated as follows: "We affirm that within an efficient
economic
policy there is no role for price controls." In discussing
the role
of the market, the program noted: "The market cannot be
replaced as
a mechanism for consumers to articulate their
preferences." These
views were a far cry from those sustained by Frei's
Christian
Democratic government of the 1960s and, especially, from
those of
Allende's UP government of 1970-73. They were also
substantially
different from those of the new market critics of the
1970s and
mid-1980s. Indeed, the CPD program conveyed that there had
been a
significant convergence of domestic views on the role of
markets in
the economic process.
Addressing the opening of the economy to the rest of
the world,
the CPD program stated: "The most important instruments of
the
external sector policy are the maintenance of a stable
high real
exchange rate and a reasonably low import tariff"
[emphasis
added]. This statement suggests that from its onset the
Aylwin
government was not prepared to implement major changes to
one of
the most fundamental features of Chile's new economics.
Data as of March 1994
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