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WEEKLY NEWSLETTER
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Chile
Index
Buses on Avenida Bernardo O'Higgins in downtown
Santiago
Courtesy Inter-American Development Bank
In early 1994, the Chilean economy stood as one of the
strongest in Latin America. Moreover, President-elect
Eduardo Frei
Ruiz-Tagle had stated that his administration would
continue the
export-oriented, market-based policies of Aylwin and
Pinochet.
Frei's minister-designate of finance, Harvard-educated
Eduardo
Aniniat Ureta, publicly endorsed the main aspects of the
current
economic model. However, the trend in the early 1990s
toward real
exchange-rate appreciation clouded the future of the
export sector.
There are still, however, some areas of concern. Most
of the
growth in Chile in the early 1990s was the result of a
combination
of increased capacity utilization and improvements in
productivity.
The contribution of capital accumulation to growth has
remained
relatively low. Despite increases, in 1992 total capital
investment
barely surpassed 20 percent of GDP. Historical data from
other
parts of the world are emphatic in indicating that high
rates of
capital formation (see
Glossary) are required to sustain
growth in
the longer run. Data for 1993 suggest that there has been
a
remarkable increase in savings (see
table 33, Appendix).
In the
years to come, it will be fundamentally important to
maintain (or
even to increase) the savings effort.
A second and related area of concern has to do with
infrastructure. Although in the case of Chile the
situation is not
as dire as in other Latin American countries, Chile needs
to
continue to maintain and improve its infrastructure. With
the
already active participation of the private sector in
important
projects, the selective participation of the government as
the main
entrepreneur is clearly needed.
A third concern is the environment, where two problems
are
particularly acute. The first one is air pollution in
Santiago. The
Aylwin government decided to address this issue in a
rather gradual
way. Whether this is the most effective and efficient
approach is
unclear. The second serious problem is ocean pollution,
especially
in the more densely populated coastal areas.
An important fourth area to focus on in the future is
the
battle against poverty. President-elect Frei stated that
this would
indeed be a priority for his administration. The
appointment of
Carlos Massad Adub, a well-respected, University of
Chicago-trained
economist, to the Ministry of Health indeed suggests a
high
commitment to social services. In that regard, an increase
in the
aggressiveness of targeted social programs seemed to be
the most
promising avenue. An important question, however, is where
to
obtain the resources. This is not easy to answer, but
creative
solutions, including a possible reduction in the military
budget in
the years to come, are among those that might be
contemplated.
* * *
A number of fine sources provide information on the
recent
transformation and performance of the country's economy.
These
include Jere Behrman's Foreign Exchange Regimes and
Economic
Development: Chile, Vittorio Corbo's Inflation in
Developing
Countries, Ricardo Ffrench-Davis's Políticas
económicas en
Chile, 1952-1970, Markos J. Mamalakis's Historical
Statistics of Chile, and Gonzalo Martners El
pensamiento
económico del gobierno de Allende.
The literature on the economic reforms of the mid-1970s
and
1980s is extensive. Comprehensive studies include Una
década de
cambios económicos: La experiencia chilena 1973-1983
by Alvaro
Bardón, Camilo Carrasco M., and Alvaro Vial G.;
Monetarism and
Liberalization, by Sebastian Edwards and Alejandra Cox
Edwards;
and The National Economic Policies of Chile, edited
by Gary
M. Walton. Tarsicio Castañeda's Combating Poverty
provides
a first-rate analysis of Chile's highly praised approach
to social
programs. In La revolución laboral en Chile and
El
cascabel al gato, José Piñera Echenique offers an
insider's
account of two of the most important and politically
difficult
reforms in the Chilean social and economic system: the
labor
decrees and the social security system.
Much of the literature on the Chilean economy appears
in
article form in scholarly and professional journals or in
edited
volumes. In Chile three journals are particularly
important. One is
Colección de Estudios de CIEPLAN, published by a
Christian
Democratic-leaning think tank, the Corporation for Latin
American
Economic Research (Corporación de Investigaciones
Económicas Para
Américal Latina--Cieplan). Early issues of this journal
examine the
economic thinking of many of the Aylwin government's
economic
officials. Other issues contain some of the more severe
criticisms
of the Pinochet economic policy. Cuadernos de
Economía,
published by the Catholic University of Chile, provides
somewhat
technical pieces on the evolution of the Chilean economy.
Most of
these are written by economists who sympathized with the
Pinochet
regime. A number of important pieces on the evolution of
the
Chilean economy have only appeared in the form of working
papers.
Although it has been sometimes difficult to gain access to
these
documents, a list of the most important can be found in
the
Bibliography. Estudios Públicos, published by the
Centro de
Estudios Públicos, is a multidisciplinary journal devoted
to public
policy. It has published important debates, with different
positions being duly represented.
Current data on monetary variables, balance of
payments,
national accounts, and employment have been published
periodically
by the Central Bank. The National Statistics Institute
(Instituto
Nacional de Estadísticas--INE) is a major source of basic
information. The United Nations Economic Commission for
Latin
America and the Caribbean, with offices in Santiago, also
is a
valuable source of economic and social data for Chile and
all other
Latin American countries. (For further information and
complete
citations,
see
Bibliography.)
Data as of March 1994
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