>>What is "Neo-Liberalism"?
>>
>>A brief definition for activists
>>
>>by Elizabeth Martinez and Arnoldo Garcia
>>
>>Around the world, neo-liberalism has been imposed by powerful
>>financial institutions like the International Monetary Fund (IMF),
>>the World Bank and the Inter-American Development Bank. It is
>>raging all over Latin America. The first clear example of
>>neo-liberalism at work came in Chile (with thanks to University of
>>Chicago economist Milton Friedman), after the CIA-supported coup
>>against the popularly elected Allende regime in 1973. Other
>>countries followed, with some of the worst effects in Mexico where
>>wages declined 40 to 50% in the first year of NAFTA while the cost
>>of living rose by 80%. Over 20,000 small and medium businesses have
>>failed and more than 1,000 state-owned enterprises have been
>>privatized in Mexico. As one scholar said, "Neoliberalism means the
>>neo-colonization of Latin America."
>
>Isn't it time to admit that Chile's *economic* development strategy
>over the past thirty years has been, broadly, a success? Chilean per
>capita GDP has doubled since 1980--and increases in inequality have
>been modest...
***** A general look at the first 16 years of market liberalisation in Chile show some mixed results as Table 1 summarizes:
================================================= TABLE 1 CHILE - GDP GROWTH FROM 1941
PERIOD TOTAL GROWTH IN PERIOD (16 YEARS)
1941 - 1956 74.14% 1957 - 1972 74.57% 1974 - 1989 61.35%
SOURCE: ECLA, IMF, World Bank, several years and table A in the statistical appendix ==================================================
The periods 1941-1956 and 1957-1972 were the stage of import-substitution strategies pursued by the different governments before 1974. These strategies included a high level of subsidy for the manufacturing sector, culminating with the Popular Unity government's socialist planning in the years 1970-1973. (I did not include the year 1973 in the calculations because 9 months of this year was a period of undeclared civil war). The period 1974-1989 was the monetarist one which stopped subsidies to the manufacturing sector and pursued an export-led strategy of development.
It is clear from the above figures that free-market economic policies in Chile did not achieve a better economic growth rate than the period of import-substitution. The rate of economic growth in this period was considerably lower than the two previous stages....
<http://robinsonrojas.com/chilnote.htm> *****
Neoliberalism under Pinochet = slow growth. The 90s, in contrast, was the decade of recovery in the rate of economic growth, averaging around 7% per year, but with the twin engines of world economy -- Japan & the USA -- sputtering, this year Chile's growth is once again sluggish:
***** Financial Times (London) June 20, 2001, Wednesday USA Edition 2 SECTION: MIDDLE EAST, AFRICA & LATIN AMERICA; Pg. 4 HEADLINE: Call for calm as region's storms buffet Chile economy: Economists see weakness of country's currency as transitory and urge focus on stimulating demand, writes Mark Mulligan BYLINE: By MARK MULLIGAN
Ricardo Lagos, the Chilean president, on Monday night surprised colleagues and business leaders by nominating Jose De Gregorio, the minister for economy, energy and mining, to the board of governors of the country's central bank.
Although Mr De Gregorio is an accomplished economist whose curriculum vitae includes a stint at the International Monetary Fund, his name never figured among the list of candidates being promoted by the Senate, which now must approve the nomination.
Critics from within the centre-left coalition which has governed Chile since its return to democracy in 1989, yesterday described Mr De Gregorio's forced resignation from the government as "brusque", given his high profile during difficult economic times.
After growth rates of around 7 per cent a year earned Chile the moniker of "the tiger of Latin America" during most of the 1990s, the country now finds itself struggling to recover from a crippling recession in 1999.
Growth forecasts for this year have been revised down from above 5 per cent - last year's level - to less than 4 per cent, while less optimistic analysts say it will struggle to post a 3 per cent gain.
Radical capital market reforms designed to attract much-needed foreign investment have had minimal immediate impact because of souring sentiment towards the whole region, the product of crisis in neighbouring Argentina.
The so-called "pseudo devaluation" in Buenos Aires has buffeted the Chilean peso, which yesterday hit yet another low against the dollar of 622.5 at the close, down more than 8 per cent since the beginning of the year.
Although the depreciation is seen as healthy for exporters, it is aggravating a crisis of confidence among medium-sized companies and wealthy individuals, who are holding off on fresh investment until the peso strengthens and the government clears a controversial legislative agenda which includes tax and labour reform.
Weak commodity prices and flagging external demand are also discouraging big new projects in mining and forestry, helping to push unemployment close to double-digit figures.
The resulting stagnation in consumer demand completes the virtuous [sic] circle of weak capital investment.... *****
Yoshie