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-ÍÍÍÍelect 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.

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A number of fine sources 100 providvide 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