Economic history of Chile
|Economic history of Chile|
The economy of Chile has shifted substantially over time from the heterogeneous economies of the diverse indigenous peoples to an early husbandry-oriented economy and finally to one of raw material export and a large service sector. A period of relative free trade that began with independence in the 1810s bought a modernizing development of certain sectors of the Chilean economy and to the formation of a local business class, a novelty in Chile. Chile experienced its first modern economic crisis with the Long depression in the 1870s.
The exploitation of lucrative nitrate deposits of the north conquered in War of the Pacific (1879–1884) marked a whole epoch in the history of Chile and its legacy for has been widely debated.
In the first half of the 20th century Chile suffered severe economic recessions. This period saw the rapid urbanization of the country, and a state led partial industrialization the economy. With the establishment of ECLAC in 1948 Chile became a regional centre of economical research.
In the mid-1970s under the influence of the Chicago Boys, Pinochet's military dictatorship initiated neoliberal economics policies. In the post-coup period there has been a rise in outsourcing, self-employment, informal employment and an increase in women's share in the labor force.
- 1 Pre-Hispanic economy
- 2 Colonial economy
- 3 Liberalism
- 4 Internal growth era
- 5 Return of liberalism
- 6 See also
- 7 Notes
- 8 References
- 9 Bibliography
- 10 External links
In the Far North the Pre-Hispanic economy of indigenous groups were divided among those that practised agriculture and were sedentary and the Changos that lived as coastal hunter-gatherers. The sedentary groups raised llamas and practised irrigation techniques. Bone necklaces, gold and copper objects interpreted as luxury goods suggest according to Villalobos et al. certain level of social stratification among the sedentary groups.
At the time of the arrival of the first Spaniards to Chile the largest indigenous population concentration was in the area spanning from Itata River to Chiloé Archipelago. In this area indigenous groups practised glade agriculture among the forests. The forests provided firewood, fibre and allowed the production of planks. Agriculture type varied; while some Mapuches and Huilliches practised a slash-and-burn type of agriculture some more labour intensive agriculture is known to have been developed by Mapuches around Budi Lake (raised fields) and the Lumaco and Purén valleys (canalized fields). Tools are known to have been relatively simple. In addition the Mapuche and Huilliche economy was complemented with chilihueque raising. The southern coast was particularly rich in molluscs, algaes, crustaceans and fish.
The fjords and channels of the Chilean Far South (excluding Chiloé Archipelago) were inhabited by nomadic canoe-using hunter-gatherers. These groups included the Chonos, the Alacaluf and the Yaghans.
Spanish conquest (1541-1600)
The conquest of Chile was not carried out directly by the Spanish Crown but by Spaniards that formed enterprizes for those purposes and gathered financial resources and soldiers for the enterprise by their own. In 1541 an expedition (enterprize) led by Pedro de Valdivia founded Santiago initiating the conquest of Chile. The first years were harsh for the Spaniards mainly due to their poverty, indigenous rebellions and frequent conspirations. The second founding of La Serena in 1549 (initially founded in 1544 but destroyed by natives) was followed by the founding of numerous new cities in southern Chile halting only after Valdivia's death in 1553.
The Spanish colonization of the Americas was characterized by the establishments of cities in the middle of conquered territories. With the founding of each city a number of conquistadores became vecinos of that city being granted a solar and possibly also a chacra in the outskirts of the city, or a hacienda or estancia in more far away parts of the countryside. Apart from land natives were also distributed among Spaniards since they were considered vital for carrying out any economic activity.
Beyond subsistence the 16th century economy of Chile was oriented towards large-scale production. Spanish colonizers used large amounts of indigenous labour following the slave labour system used in the sugar cane plantations of the Mediterranean islands and some Atlantic islands. This system of labour successively killed the production base leading to the imposition of the encomienda system by the Spanish Crown in order to prevent excesses. In Chile Spanish settlers managed to continue to exploit indigenous labour under slave like conditions despite the implementation of the encomienda. Rich Spanish settlers had over time to face opposition to their mode of production by Jesuits, Spanish officials and indigenous Mapuches.
The initial Spanish settlers of Chiloé Archipelago (conquered in 1567) attempted to base their economy on gold extraction and a "hispanic-mediterranean" agricultural model. This activity ended in a general failure given the unsuitable conditions of the archipelago. Spaniards however reoriented their activities into logging Fitzroya.
Century of the suet (1600-1687)
The collapse of the Spanish cities in the south following the battle of Curalaba (1598) meant for the Spaniards the loss of both the main gold districts and the largest indigenous labour sources. After those dramatic years the colony of Chile became concentrated in the central valley which became increasingly populated, explored and economically exploited. Following a tendency common in the whole Spanish America haciendas were formed as the economy moved away from mining and into agriculture and husbandry. Compared to the 16th and 18th centuries Chilean mining activity in the 17th century was very limited. Over the course of the 17th century the indigenous population of Chile declined making the encomiendas less and less important. Chilean encomenderos who had encomiendas in Cuyo, across the Andes, introduced to Chile indigenous Huarpes who they hired to other Spanish without encomiendas.
In the 17th century economy of the Viceroyalty of Peru, Chile's husbandry and agriculture based economy had a peripheral role, contrasting to ore-rich districts like Potosí and the wealthy city of Lima. Husbandry products made up the bulk of Chilean exports to the rest of the viceroyalty. These products included suet, charqui and leather. This trade made Chilean historian Benjamín Vicuña Mackenna label the 17th century the century of suet (Spanish: Siglo del sebo). Other products exported included dry fruits, mules, wines and minor amounts of copper. Trade with Peru was controlled by merchants from Lima that not only managed also the trade with Chile and Panama but also enjoyed protection by the authorities in Lima. In addition to the exports to coastal Peru Chile also exported products inland to Upper Peru through the port of Arica. Trade inside Chile was small since cities were tiny and self-sufficient.
Generally the extraction of wood had little importance in colonial Chile but Chiloé Archipelago and Valdivia were exceptions. These two areas exported planks to Peru. With the destruction of Valdivia in 1599 Chiloé gained increased importance as the only locale that could supply the Viceroyalty of Peru with Fitzroya wood. In 1641 the first large shipment of Fitzroya wood left Chiloé.
Century of the wheat (1687-1810)
In the 1650–1800 period the Chilean lower classes grew considerably in size. To deal with the poor and landless population a policy of founding cities[note 1] and granting lands in their surroundings was implemented. From 1730 to 1820 a large number of farmers settled in the outskirts of old cities or formed new cities. Settling as a farmer in the outskirts of old cities (La Serena, Valparaíso, Santiago and Concepción) was overall more popular than joining a new city since it secured a larger consumer market for agricultural products. Chilean haciendas (latifundia) engaged little in the supply of Chilean cities but focused on international exports for revenues.
|“||without Chile, Lima would not exist||”|
Chile begun exporting cereals to Peru in 1687 when Peru was struck by both an earthquake and a stem rust epidemic. Chilean soil and climatic conditions were better for cereal production than those of Peru and Chilean wheat was cheaper and of better quality than Peruvian wheat. According to historians Villalobos et al. the 1687 events were only the detonant factor for exports to start. The Chilean Central Valley, La Serena and Concepción were the districts that came to be involved in cereal export to Peru. It should be pointed out that compared with the 19th century the area cultivated with wheat was very small and production modest.
Initially Chilean latifundia could not meet the wheat demand due to a labour shortage, so had to incorporate temporal workers in addition to the permanent staff. Another response by the latifundia to labour shortages was to act as merchants buying wheat produced by independent farmers or from farmers that hired land. In the period 1700 to 1850 this second option was overall more lucrative.
The 1687 Peru earthquake also ended a Peruvian wine-boom as the earthquake destroyed wine cellars and mud containers used for wine storage. The gradual decline of Peruvian wine even caused Peru to import some wine from Chile as it happened in 1795 when Lima imported 5.000 troves (Spanish: botijas) from Concepción in southern Chile. This particular export showed the emergence of Chile relative to Peru as a wine-making region.
Haciendas of central Chile are believed to had become labour-saturated by 1780 generating an "excess" population that could not be incorporated into their economy. Some of this population settled in the outskirts of larger cities while other migrated to the mining districts of Norte Chico. Chile saw an unprecedented revival of its mining activity in the 18th century with annual gold production rising from 400 to 1000 kg over the course of the century and the silver annual production rising from 1000 to 5000 kg in the same interval.
In the 18th century the shipbuilding industry in Valdivia, one of the city's main economic activities, reached its peak building numerous ships including frigates. Other shipyards of Chile included those of Concepción and Chiloé Archipelago. The Chiloé shipyards constructed he bulk of the ships in Chile until the mid-18th century. In 1794 a new shipyards was established the mouth of Maule River (present day Constitución). Despite some navigators expressing that Valdivia had better conditions than Guayaquil in Ecuador, this last port was the chief shipyard of the Spanish Empire in the Pacific.
Direct trade with Spain over the Straits of Magellan and Buenos Aires begun first in the 18th century constituting primarily an export route for gold, silver and copper from Chilean mining. By the same time Spains trade monopoly with its colonies was successively weakened by smugglers from England, France and United States.
Independence Era (1810-1830)
The independence wars in Chile (1810–1818) and Peru (1809–1824) had a negative impact on the Chilean economy. Trade was disrupted and armies in Chile pillaged the countryside. The war made commerce a high risk activity and royalist Peru, then the only market for Chilean agricultural products, was closed to commerce with independent Chile. The Guerra a muerte phase was particularly destructive for the Biobío area and ended only to see a period of outlaw banditry (e.g. Pincheira brothers) occur until the late 1820s. Chilean mining activity came out of the independence wars with relatively little damage.
During the Chilean Independence War the scarcity of weapons in the Chilean market forced the patriots to do large weapon purchases abroad or to the ships that anchored at Chilean ports. In addition to the finance of the Chilean army the nascent Chilean state had also to wholly finance the Chilean-Argentine Army of the Andes after San Martín begun to disobey the orders from Argentina and the Freedom Expedition of Perú, originally thought to be financed in part by Argentina.
An expensive loan of ₤1,000,000 taken in 1822 in London in order to finance the independence struggle became a heavy burden for the Chilean state and took decades to pay off. Finance minister Diego José Benavente attempted to reform the tax system but met severe opposition to many measures. To pay off the loan the Chilean state granted the company Sociedad Portales, Cea y Cía a sales monopoly of tobacco in Chile, but this activity ended in failure.
Early republican boom (1830-1873)
In the early republican period Chilean international trade grew considerably. Merchants from countries like England, Italy, Germany and the United States settled in Chile. Chile was officially open to trade to all nations since 1811 but applied protectionist policies to favour domestic production in a manner that has been called neomercantilism. Chile's relative openness to international trade contrasted with contemporary truly protectionistic policies of Peru and Argentina. The 1830—1870 period was one of the greatest growth for the Chilean economy and was largely indebited to two export booms: the copper and silver mining in Norte Chico and the Chilean wheat cycle.
Following the discovery of silver at Agua Amarga (1811) and Arqueros (1825) the Norte Chico mountains north of La Serena were exhaustively prospected. In 1832 prospector Juan Godoy found a silver outcrop (reventón) 50 km south of Copiapó in Chañarcillo. The finding attracted thousands of people to the place and generated significant wealth. After the discovery of Chañarcillo disocovery many other ores were discovered near Copiapó well into the 1840s. Copiapó experienced a large demographic and urbanistic growth during the rush. The town became a centre for trade and services of a large mining district. The mining zone did slowly grew northwards into the diffuse border with Bolivia. At the end of the silver rush rich miners had diversified their assests into banking, agriculture, trade and commerce all over Chile.
In the 19th century, access to the Californian and Australian markets made wheat export a very lucrative activity. In the mid 19th century, these countries experienced large gold rushes which created a large demand for wheat. Chile was at the time the "only wheat producer of some importance in the Pacific". At the same time as the wheat cycle new irrigation canals were built and apiculture and some machines introduced into Chilean agriculture. Apart from that, new markets were explored for Chilean agricultural products. The wheat boom did not last for long; by 1855 California managed to supply itself with wheat and from 1858 onwards it went over to export wheat to Chile. The Australian gold rush of 1851 had the effect of decreasing the labour used in agriculture forcing the colony to import wheat from Chile sustaining Chilean wheat exports whilst the Californian market vanished. After the gold rushes of California and Australia were over these regions begun exporting wheat competing with Chilean wheat forcing from the mid-1860s onwards wheat exports to be shifted to England. Between 1850 and 1875 the area cultivated with wheat and barley for export in Chile rose from 120 to 450 ha. The "cycle" came to an end in the late 1870s due to the increased technification of agriculture in the United States and Argentina plus the competition of Russia and Canada. The end of the wheat cycle added to the already difficult situation that Chilean economy was passing through in the 1870s.
In the mid-19th century the value relationship established by law between gold and silver coin undervalued silver coins causing the flight of silver from Chile due to better prices in the international market and a scarcity of silver coins in Chile. With the abolition of the silver standard in most countries that begun in Germany in 1871 the unadjusted Chilean rate that had previously undervalued silver came to undervalue gold instead.
Until the mid-19th century more than 80% of Chilean population remained rural working in agriculture or mining and was to a large degree self-sufficient to produce articles of consume.
Saltpetre Republic (1873-1914)
Starting in 1873, Chile's economy deteriorated. Chilean wheat exports were outcompeted by production in Canada, Russia, and Argentina. Chilean copper was largely replaced in international markets by copper from the United States and Río Tinto in Spain. Chile's silver mining income also dropped. In the mid-1870s, Peru nationalized its nitrate industry, affecting both British and Chilean interests. Contemporaries considered the crisis the worst ever of independent Chile. Chilean newspaper El Ferrocarril predicted 1879 to be "a year of mass business liquidation". In 1878, then-President Anibal Pinto expressed his concern through the following statement:
|“||If a new mining discovery or some novelty of that sort does not come to improve the actual situation, the crisis that has long been felt will worsen||”|
—Anibal Pinto, president of Chile, 1878.
This "mining discovery" came, according to historians Gabriel Salazar and Julio Pinto, into existence through the conquest of Bolivian and Peruvian lands in the War of the Pacific (1879-1883). It has been argued that the economic situation and the view of new wealth in nitrate was the true reason for the Chilean elite to go into war against Peru and Bolivia. Another response to the economic crisis, according to Jorge Pinto Rodríguez, was the new pulse of conquest of indigenous lands that took place in Araucanía in the 1870s.
As the victor and possessor of a new coastal territory following the War of the Pacific, Chile benefited by gaining a lucrative territory with significant mineral income. The national treasury grew by 900 percent between 1879 and 1902, due to taxes coming from the newly acquired lands. British involvement and control of the nitrate industry rose significantly, but from 1901 to 1921 Chilean ownership increased from 15% to 51%. The growth of Chilean economy sustained in its saltpetre monopoly meant, compared to the previous growth cycle (1832-1873), that the economy became less diversified and overly dependent on a single natural resource. In addition the Chilean nitrate, used world-wide as fertilized, was sensitive to economic downturns as farmers made cuts on fertilizer use one of their earliest economic measures in the face of economic decline. It has been questioned on wether the nitrate wealth conquered in the War of the Pacific was a resource curse or not. During the Nitrate Epoch the government increased public spending but was however accused of squandering money.
The 1870s saw of industries like sugar refineries, confectioneries and shoe and textile factories emerge. Since the 1980s some scholars argue that Chile was in route become an industrialized nation before 1914, economist Ducoing claims no industrialization took place, but rather a modernization process.
Starting in 1878, the Chilean state increased the issuing of new banknotes (fiat currency) causing the Chilean peso to devaluate. When the War of the Pacific (1879-1883) flared up the government issued more fiat currency in order to afford the costly war, and continued to do so in 1880 and 1881. In 1881 the country prepared for a return to the gold standard and to gradually eliminate fiat currency. However, during the Chilean Civil War in 1891 the government of José Manuel Balmaceda issued more fiat money to finance this new war. By 1891 a dispute begun between those who supported a return to gold convertibility of money ("oreros") and those who opposed convertibility ("papeleros"). In 1892 the "oreros" succeeded in having the convertibility of currency approved by law and in December 1895 non-convertible legal tender was pulled out of circulation. In 1898 the convertible regime collapsed once again in the face of severe economic instability (crop failure, war scare) and was abolished. Issuing of fiat money then continued until 1907 but from there on currency was issued with convertibility to gold or saltpetre mining related legal titles.
The establishment of the Buenos Aires-Mendoza railroad in 1885 ended the lengthy and costly trade with carts that connected these two regions of Argentina and facilitated cattle exports from the pampas to Chile, albeit in the last portion of the route the cattle had to walk over the high mountain passes of the Andes. These imports resulted in a lowering of meat prices in Chile. Sociedad Nacional de la Agricultura (National Agriculture Society), a landowners organization, pushed for a tariff on Argentine cattle and in 1897 the tariff was passed in a bill at the Chilean congress. The unpopular tariff resulted a massive protest in that degenerated into a destructive riot in Santiago on October 1905. Chilean wine exports to Argentina were hampered by the lack of effective land transport and a series of war scares. This situation changed after the Pactos de Mayo were signed in 1902 and the inauguration of the Transandine Railway in 1909, making war unlikely and trade across the Andes easy. Governments agreed to sign a free trade agreement. Argentine winegrowers association, Centro Vitivinícola Nacional, dominated by European immigrants protested vigorously against the free trade agreement since Chilean wines were considered a threat to the local industry. The complaints of Argentine wine growers in conjunction with that of Chilean cattle farmers represented in Sociedad Nacional de la Agricultura ended up tearing down the plans for a free trade agreement.
Rapid economic expansion in Chile in the late 19th century did not only occurred in the northern regions but also in the extreme south where in Tierra del Fuego a gold rush was triggered in 1884 fueled economic growth in Punta Arenas and attracted a considerable amount of European immigrants. Tierra del Fuego and much of Magallanes Region did also experienced a fast growth of the sheepherding industry since the 1880s accompanied by colonization of the sparsely populated Patagonian grasslands.
Crisis and reestructuration (1914-1938)
The opening of Panama Canal in 1914 caused a severe drop in traffic along Chilean ports due to shifts in the maritime trade routes. In addition to this international trade collapsed and state income was reduced to half of its previous value after the start of the World War I in 1914. The Haber process, first applied on an industrial scale in 1913 and later used as part of Germany's war effort due to its lack of access to Chilean saltpetre, ended Chile's monopoly on nitrate and led to an economic decline in Chile. While saltpetre mining gradually waned in importance copper mining rose, exporting raw materials to a level unprecedented in the history of Chile. By 1929 copper exports had reached the same values as saltpetre exports, and in 1937 the value of copper exports largely surpassed that of saltpetre. In the 1920-1937 period both industries had combined a 70-83% share of the value of Chilean exports.
In the 20th century two new economic actors rose to prominence in Chile; the state and capital from the United States. Beginning in 1905 United States-based companies came to develop and control copper mining in Chile. The main companies were; Anaconda Copper in control of Chuquicamata, Kennecott Copper Corporation in control of El Teniente and Andes Copper in control of Potrerillos. Between the 1910s and 1930 United States investments in Chile had a tenfold increase, the bulk of which was directed to mining activities.
The increased influence of the United States in Chilean economy did not only manifested itself in copper mining but also in foreign trade. After the First World War the United States became the prime importer of Chilean goods and in the 1930s it overtook the United Kingdom's place as the prime source of Chilean imports.
Edwin W. Kemmerer, a "Money Doctor", was invited to Chile in 1925 to deal with monetary policy and inflation problems which were considered one of the principal economic problems of Chile at the time. The visit by Kemmerer was used to back up monetary policies already outlined by Chileans. These reforms included the creation of a central bank, the establishment of government budget law and a general bank law. All these reforms were established by rule by decree by Arturo Alessandri who had been reestablished in power following a coup d'etat against him in 1924 (where the coup-makers protested among other things against inflation). Gold convertibility was established in 1925. As result of these reforms Chile managed to tame inflation to such degree that the 1920s were the decade with less inflation in the 1890-1980 period. Another concequence of the reforms was an increased easyness by Chile to obtain loans not only in the United States but also in the United Kingdom, Switzerland and Germany. In the years after the visit of Kemmerer there was a sharp increase in foreign investments.
The Great Depression that begun 1929 was felt strongly in Chile from 1930 to 1932. Saltpetre and copper exports collapsed. The World Economic Survey of the League of Nations declared Chile the worst affected nation by the depression. The crisis caused the authoritarian regime of Carlos Ibáñez del Campo to fall in July 1931 followed by a succession of short-lived governments until the election of Arturo Alessandri in December 1932. The economic crisis rose the levels of unemployment and caused a migration of unemployed saltpetre miners from the north to Santiago. Miners constituted around 6% of the active population but made up more than half of the unemployed during the crisis. Numerous soup kitchens sprang up in Santiago while homeless people begun to dwell in caves in the hills around Santiago. The state responded to the crisis by gradually raising tariffs, increasing internal demand and increasing control over the "flux and use" of foreign currency. Quotas and licences were established for imports and the gold convertibility was once again abolished in 1931.
These policies contributed to an industrial recovery and for the industry to already by 1934 surpass the levels of activity of 1929. In the 1930s the massive industrial growth was spearheaded by the textile industry, but non-metallic mining, chemical industries and machine and transport factories did also expand. Overall industry recovered and expanded faster than the traditional exports in the post depression period.
The Great Depression brought initially a period of deflation of Chilean currency followed by inflation in 1931 and 1932. The inflation was bought under control momentarily after 1932 but resurfaced again in 1936.
The 1900-1930 period was the one of largest growth of agriculture in the 20th century until the 1980s. Despite of this conditions in for rural workers remained harsh with Tancredo Pinochet denouncing the poor conditions of workers in the hacienda of president Juan Luis Sanfuentes during his presidency (1915-1920). Within a dual sector economic model the Chilean hacienda has been characterized as a prime example of a primitive and rural component. McBride, a British who visited Chile in the 1930s, is reported to have been "astounded" to see haciendas with "agricultural methods that reminds of ancient Egypt, Greece or Palestine."
Internal growth era
Partial industrialization (1938-1958)
Industrialization became a state policy from 1938 onwards. This policy line became possible after the victory of the Popular Front, a coalition including communists and socialists, in the 1938 elections. The perceived success of the Soviet economy, the fast growth of other centralized European economies and the influence of Keynesian economics helped to establish "development inwards" ideas in Chile paving the way for active state involvement in the nation's economy. These tendencies were reinforced in 1948 with the establishment of ECLAC (CEPAL in Spanish) in Santiago and the arrival of Raúl Prebisch in 1950 as director of it. Chile's "development inwards" policies were part of a regional phenomenon with Argentina, Brazil and Uruguay applying similar policies.
In the aftermath of the disastrous 1939 Chillán earthquake, the government created CORFO (Spanish acronym for Production Development Corporation) to help in the reconstruction of the country and to industrialize the country, mechanize the agriculture and help mining to develop. To finance CORFO loans were taken by the government, the bulk of the taxes were raised and copper mining in particular got an additional tax.
One of the early tasks of CORFO was to "solve the old problem of the ironworks". In doing so it injected capital and granted loans to the Compañía Electro-Siderúrgica e Industrial de Valdivia, the inheritor to the failed Altos Hornos y Acerías de Corral. In 1947 CORFO begun the construction of a large steel mill in Huachipato near Concepción which in 1950 begun operating as Compañía de Acero del Pacífico. Another division of CORFO engaged in oil exploration making a breakthrough discovery in northern Tierra del Fuego in 1945. Extraction began in 1949 and in 1950 the state created ENAP (National Petroleum Company) to deal with oil extraction and prospection. Until 1960 most oil extracted in Chile came from Tierra del Fuego.
Industrial activity experienced enormous growth in the 1940s, it expanded at least 6.1% annually in that decade. The industries share of GDP rose from 16.7 to 23.7 in the 1940-1955 period. Starting in 1953 the growth rate of Chilean economy decreased to an annual average of 0.7% but increased to an annual average of 2.4-3.0% in the 1957-1960 period. The decline in the economic growth from 1953 onwards was variously attributed to excessive state intervention, neglect of agriculture and mining, unequal wealth distribution and dependency on state intervention.
Structural reforms (1958-1970)
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Statism and collectivism (1970-1973)
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During 1972, the macroeconomic problems continued to mount. Inflation surpassed 200 percent, and the fiscal deficit surpassed 13 percent of GDP. Domestic credit to the public sector grew at almost 300 percent, and international reserves dipped below US$77 million. Real wages fell 25 percent in 1972
At the same time, the United States conducted a campaign to deepen the inflation crisis. Chilean economist Jacobo Schatan writes, "It was clear that the scarcity had been manipulated for political reasons, to create a climate favourable to both the coup and, subsequently, the total change of the economic system."
Return of liberalism
Militaries and Chicago Boys (1973-1990)
After the military took over the government in 1973, a period of dramatic economic changes began. The Chilean economy was still faltering in the months following the coup. As the military junta itself was not particularly skilled in remedying the persistent economic difficulties, it appointed a group of Chilean economists who had been educated in the United States at the University of Chicago. Given financial and ideological support from Pinochet, the U.S., and international financial institutions, the Chicago Boys advocated laissez-faire, free-market, neoliberal, and fiscally conservative policies, in stark contrast to the extensive nationalization and centrally-planned economic programs supported by Allende. Chile was drastically transformed from an economy isolated from the rest of the world, with strong government intervention, into a liberalized, world-integrated economy, where market forces were left free to guide most of the economy's decisions. 
From an economic point of view, the era can be divided into two periods. The first, from 1973 to the Crisis of 1982, corresponds to the period when most of the reforms were implemented. The period ended with the international debt crisis and the collapse of the Chilean economy. At that point, unemployment was extremely high, above 20 percent, and a large proportion of the banking sector had become bankrupt. But this was a worldwide crisis, and as shown in the graph showing growth in GDP per capita did not have a long lasting effect on the Chilean economy. During that first period, an economic policy that emphasized export expansion and growth was implemented. However, some economists argue that the economic recovery of the second period, from 1982 to 1990, was due to an about-face turn around of Pinochet's free market policy and the fact that, in 1982, he nationalized many of the same industries that were nationalized under Allende.
With the economic crisis of 1982, the "monetarist experiment" came to be regarded as a failure by some.
The pragmatic economic policy after the crises of 1982 is appreciated for bringing constant economic growth. It is questionable wether the radical reforms of the Chicago boys contributed to the past 1983 groth. According to Ffrench-Davis, consultant of the United Nations Economic Commission for Latin America and the Caribbean, the 1982 crises as well as the success of the pragmatic economic policy after 1982 proves that the 1973-1981 radical economic policy of the Chicago boys harmed the Chilean economy.
The road to 1997 (1990-1997)
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- These cities were often in fact more of villages or towns due to their size.
- Salazar & Pinto 2002, pp. 184-187.
- Villalobos et al. 1974, pp. 21-22.
- Otero 2006, p. 36.
- Otero 2006, pp. 21-22.
- Dillehay, Tom D.; Pino Quivira, Mario; Bonzani, Renée; Silva, Claudia; Wallner, Johannes; Le Quesne, Carlos (2007) Cultivated wetlands and emerging complexity in south-central Chile and long distance effects of climate change. Antiquity 81 (2007): 949–960
- Villalobos et al. 1974, p. 50.
- Villalobos et al. 1974, p. 57.
- Villalobos et al. 1974, p. 87.
- Villalobos et al. 1974, pp. 97-99.
- Villalobos et al. 1974, pp. 109-113.
- Salazar 1985, pp. 23-25.
- Hanisch, Walter (1982), La Isla de Chiloé, Academia Superior de Ciencias Pedagógicas de Santiago, pp. 11–12
- Torrejón, Fernando; Cisternas, Marco; Alvial, Ingrid and Torres, Laura. 2011. Consecuencias de la tala maderera colonial en los bosques de alece de Chiloé, sur de Chile (Siglos XVI-XIX)*. Magallania. Vol. 39(2):75-95.
- Salazar & Pinto 2002, p. 15.
- Villalobos et al. 1974, pp. 160-165.
- Villalobos et al. 1974, p. 168.
- Villalobos et al. 1974, pp. 166-170.
- (Spanish) Villalobos, Sergio; Retamal Ávila, Julio and Serrano, Sol. 2000. Historia del pueblo Chileno. Vol 4. p. 154.
- Villalobos et al. 1974, pp. 155-160.
- Villalobos et al. 1974, p. 225.
- Salazar 1985, p. 49.
- Salazar 1985, p. 58.
- Salazar 1985, p. 52.
- Salazar 1985, p. 88.
- Quoted in Diego Barros Arana's História general de Chile, Vol. 16 (Santiago, 1884–1902), p. 74.
- Collier, Simon and Sater William F. 2004. A History of Chile: 1808-2002 Cambridge University Press. p. 10.
- Salazar 1985, pp. 40-41
- Lacoste, Pablo (2004), "La vid y el vino en América del Sur: el desplazamiento de los polos vitivinícolas (siglos XVI al XX)", Revista Universum 19 (2): 62–93 
- del Pozo, José (2004), Historia del vino chileno, Editorial Universitaria, pp. 35–45
- Salazar 1985, p. 153-154.
- Villalobos et al. 1974, pp. 226-227.
- Guarda 1973, pp. 45-47.
- Isabel, Montt Pinto (1971). Breve Historia de Valdivia. Buenos Aires-Santiago: Editorial Francisco de Aguirre. p. 55.
- León Sáenz, Jorge (2009), "Los astilleros y la indutria matitima en el Pacífico americano: Siglos XVI a XIX", Diálogos, Revista Electrónica de Historia 10 (1): 44–90
- Salazar & Pinto 2002, pp. 16-17.
- Villalobos et al. 1974, pp. 406-413.
- Villalobos et al. 1974, pp. 416-420.
- Simon Collier, William F. Sater, A history of Chile, 1808–1994, Cambridge University Press, 1999, p. 39, ISBN 0-521-56075-6
- Salazar & Pinto 2002, pp. 19-21.
- Salazar & Pinto 2002, p. 23.
- Villalobos et al. 1974, pp. 469-472.
- Los ciclos mineros del cobre y la plata. Memoria Chilena.
- Bethell, Leslie. 1993. Chile Since Independence. Cambridge University Press. p. 13-14.
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