NEOLIBERALISM AND THE WASHINGTON CONSENSUS:

THE CASE OF CHILE

12. STRATEGIES FOR ECONOMIC DEVELOPMENT

• The Liberal Eera (1880s-1920s)

• Import-Substitution Industrialization (1930s-1970s)

• The Socialist Alternative (1950s-1980s)

• Neoliberalism (1980s-present)– The “new Left”– ALBA

WASHINGTON CONSENSUS

• Reducing the role of the state– Less regulation– Privatization

• Liberalizing trade– Reduce tariffs, quotas– Expand exports

• Promoting the private sector– Foreign and local production– Stimulate market competition

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)

CHILE: BASIC STATS

• Population 16.9 million

• GNP/capita 8,350 USD

• Poverty rate 13.7 %

DEMOCRATIC PRESIDENTS

Center-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”…