(K. Coughlan, "The dark side of Chile's economic miracle")
-------------------------------------------------------------
KELLY COUGHLAN, SECOND YEAR, FULL-TIME
QUESTION: TO WHAT EXTENT HAVE MONETARIST POLICIES BROUGHT ABOUT
ECONOMIC AND SOCIAL DEVELOPMENT IN THIRD WORLD COUNTRIES?
UTILISE AT LEAST ONE CASE STUDY.
(This extended essay contains approximately 5,800 words)
Tutor: Dr. Robinson Rojas /MAY 1992
---------
An outline of the main tenets of monetarism as a strategy of
development is necessary before attempting to assess to what extent
monetarist policies can bring about economic and social development
in Third World countries.
Monetarism ( market liberalization ) as a development strategy
aims to lay the base for a more successful and pure model of
capitalist development through radically changing prevailing
economic structures in the societies where the new strategy is
implemented. Followers of monetarism assume that the private
markets in Third World countries have been badly distorted by the
prior protectionist, labour and social welfare measures used to
induce industrial development during the period of import-
substitution strategy (mainly in Latin America)(Rojas, 1992). The
monetarist solution to this distortion is to implement a wide-
ranging set of reforms designed to liberalize commodity and
financial markets in order to get prices right in the domestic
market and fully expose the domestic system of production to
international competition. The above require privatisation of state
enterprises to allow the surplus to go to the private sector and to
create private capital markets, elimination of government subsidies
for basic foods, social services and private enterprises ( it is
asserted that government expenditure and the resulting tax burden
has acted as a drag on economic growth, especially blocking
domestic industrialization ) and opening up the domestic economy to
international competition through tariff reductions and floating
exchange rate, and giving to private enterprise more power of
decision vis-a-vis labour organisation. (All of these measures are
very similar to the International Monetary Fund's programme of
stabilisation, even when they are now implemented with long-term
aims) (Korner et al, 1986).
Monetarists argue that these reforms will bring about an
acceleration in private economic activity which will create a
higher rate of economic growth and new prosperity that will trickle
down to the whole population, inducing a sustainable long period of
growth with industrialisation. This implies reducing the share of
agriculture in the national income, enlarging the share of the
manufacturing sector, and changing the pattern of exports from
being dominated by raw materials to being composed mainly by
manufactured goods.
In effect monetarism is a capital formation strategy, that
assumes new productive capacity, jobs and wealth will be created in
an accelerating and self-sustaining cycle. (Rojas, 1992)
Nevertheless this strategy has been posing some problems in
Third World countries because as Beccaria and Carciofi point out,
"the sharp disagreement between Keynesians and Monetarists revolves
around the best policy instrument to 'stabilise' industrialised
economies where no major structural problems exist. In the case of
developing countries the term 'stabilisation' is totally inadequate
to describe the operation of the economic policy. What is at stake
here is not the control of a certain level of aggregate demand and
inflation, but rather a more comprehensive procedure to speed up
the pace of industrial growth. Economic policy making in that
context is, in fact, an overall strategy which makes use of several
policy instruments to transform the nature of society"..."the
central question is to know whether or not the ruling classes of
that society will be able to contain control of economic policy so
as to shape the productive structure according to their intentions.
This process implies both a successful internal alliance and a
viable integration of the domestic economy into the world market".
( Beccaria and Carciofi, 1981, p.51. Underlined by the author of
this essay).
And then, as is illustrated by Hunt and Sherman (1990, p.500)
when assessing the negative aspects of monetarism:
"It is asserted that the market system is distorted by
monopoly, so that it is not efficient even in the narrowest sense.
Workers are exploited by employers who make huge profits from the
products created by workers, so the distribution is not equitable.
Moreover, the capitalist market system results in periodic
recessions and depressions, so growth is uneven and much slower
than it need be. These periodic crisis are internal to the system
as evidenced by the fact that they keep recurring in the same
patterns time and again. Particularly in those places where
monetarist policy has been tried--such as by the junta in Chile,
the Begin government in Israel, the Thatcher government in England,
and the Federal Reserve system in the United States- the result
being millions of workers unemployed".
Hunt and Sherman's "periodic depressions and recessions" are
clearly shown in Graph One since the beginning of Pinochet's
dictatorship. Moreover, the monetarism induced business cycles were
more dramatic in the case of Chile and they closely followed the
cycles in the U.S. economy. As the literature have been showing,
the social effects of these economic cycles will be as dramatic.
Monetarist strategies then attempt a transformation of the
economic structure and the social and political institutions with
the aim of setting up a working socio-economic system for rapid
accumulation of capital. The main features of this model in Third
World countries so far, at least in the short-term, can be listed
as follows: a higher level of unemployment, a further polarisation
of the domestic market, reflecting the modern and traditional
sectors, lower living standards for a significant part of the
population, a redistribution of income in favour of the richest
strata (through new patterns of taxation and higher rates of
profits), bankruptcies of individual businesses working under
international average levels of productivity ( now competing with
imported goods), the selling of national assets to finance state
spending without more taxation and further internationalisation of
the domestic economy.
In general terms, the above leads to very high social costs
which will require a "strong state" to keep the social structure
together, while the radical transformation is in progress. Thus,
the political environment, to carry out these monetarist economic
policies have had well defined characteristics:
1) persistent attacks on political opposition through the use of
military force in less developed countries, and other means in
industrialised countries, such as labelling the labour party in the
U.K. as "socialist" or even the Church of England. For instance, in
1980 the then British Minister of Trade, Cecil Parkinson stated
that " the Chilean economic experience is very similar to what we
are developing here, though in the case of Chile it was possible to
impose a policy and regulate its implementation, but this isn't
possible in our country. Here we have to proceed with more caution
and convince people of the benefits of our policies" ( El Mercurio,
Edicion Internacional, 5 November 1980, as quoted in O'Brien, 1981,
p.38).
2) suppressing or weakening trade unions.
3) suppression or reduction of civil rights (the right to strike,
freedom of speech, etc.), together with a stronger police force.
4) in Third World countries, an extensive use of the police and
army to keep the market forces "free" in the short-term, with the
aim of creating a social consensus to legitimise the
transformations in the long term). So far it looks like this new
type of social consensus can only be maintained under an increasing
political dictatorship.
5) during the Cold War, the use of anti-communism as a
justification for reducing political rights.
6) the development in Third World countries of a new national
ideology, known as the "doctrine of national security" to further
justify the reduction of political rights.
Monetarist policies have been adopted by several
industrialised countries ( UK, U.S.A, among others) and in less
developed countries (Chile, Argentina, Brazil, etc) in the last
decade or so. The most outstanding application of monetarism has
taken place in Chile since 1974, after the military coup in
September 1973. Its case is considered to be an almost complete
form of monetarism so far. For this reason I will choose Chile to
test the effects of the implementation of a market liberalisation
strategy. To assess to what extent monetarist policies have brought
about social and economic development as intended I will use the
following general criteria:
1) What has been happening with economic growth?
2) What has been happening with industrialisation?
3) What has been happening with exports? ( are manufactured goods
overtaking raw materials and agricultural products as the main
exports?).
4) What has been happening with inflation?
5) What has been happening with unemployment?
6) What has been happening with the distribution of income,
poverty, education, health and housing.
The monetarist experiment in Chile is associated with one of
the most brutal dictatorships in Latin America. Why did this
happen? Maybe one explanation is that market liberalisation in
Chile came as a response to the attempt to build a democratic
socialist society from 1970-1973. Thus it is important to have a
clear understanding of the economic, political and social features
of Chilean society in that period. In accordance with Rojas (1976,
pp. 233-35) Chile was, in the late 60s "for the most part a
developing capitalist country, but dependent on U.S. transnational
capital". From the same source the following statistics will
highlight the Chilean stage of development:
The share of the different economic sectors in the national income
were as follows: agriculture, forestry, and fishing, 10.5%; mines,
9.7%, manufacturing, 25.7%, construction, 4.5%, electricity, gas
and water, 1.7%; transportation, warehousing and communications,
4.4%; wholesale and retail commerce, 21.6%; other services, 21.9%.
The percentage distribution of the workforce was: agriculture,
forestry, and fishing, 25.6%, mining, 3%, manufacturing, 21.6%,
construction, 6.2%; electricity, gas and water, 8%; transportation,
warehousing, and communications, 6.3%; commerce and services,
36.5%. This distribution illustrates that Chile was a semi-
industrialised country.
At the same time economic concentration was very high: no more than
1,000 adults (for whom 1,500,000 labourers worked) controlled 60%
of all the companies in the country. This social group was also
closely related to American Transnational companies. The following
figures illustrate to what extent: machinery and equipment, 50%
American control;iron, steel, and metal products, 60%; rubber
products, 45%; automotive assembly, 100%; radio and television,
nearly, 100%; office equipment, nearly 100%; copper fabricating,
100%; tobacco, 100%; advertising, 90%. Moreover U.S. transnationals
owned the largest copper mines (the main export earner for Chile)
and telephones. On the other hand the labour force was very well
organised: trade unionism had reached a high level. In 1972 the
"Centralised Union of Workers" had a million members, that is, 33%
of the workforce. Also by 1972, agricultural unions represented
more than 100,000 workers.
Trade Unions also played an active part in politics, often leading
the struggle against the domination of the American multinationals
(Chilean workers had a high level of political awareness), and if
necessary paralysing the country whenever there was a danger of
fascism emerging.
From 1970-1973 the Popular Unity tried to change the Chilean
socio-economic structure which they saw as "dependent on the
imperialist nations and dominated by bourgeois groups who are
structurally related to foreign capital and cannot resolve the
country's fundamental problems-problems which are clearly the
result of class privilege which will never be given up voluntarily"
(Zammit, 1973, p.255). In order to implement the transformation
the Popular Unity proposed a peaceful transition to socialism ("the
chilean road to socialism")(Rojas, 1976 p.vii)(Loveman, 1988,
pp.292-93).
The basic political reforms proposed by the government were
a people's assembly, a reorganisation of the judiciary and
education system, a greatly increased participation of workers and
peasants through unions and community organisations in national and
local policy making. At the economic level the aim was to
restructure the economy by increasing, significantly, the state
sector by expropriating all agricultural estates which were more
than eighty hectares of irrigated land, nationalising the financial
system (banks and insurance companies), and the Chilean monopolies
in the industrial sector, as well as nationalising the U.S.
monopolies in the areas of copper and telephones. By late 1973, the
ruling class in Chile managed, by various political and economic
means, including the utilisation to their benefit, of the Popular
Unity's political and economic mistakes, to overthrow the
government and establish a military dictatorship. The military
regime started a process of reversing the former governments
reforms. This process is very well described by Meller (1990, p.
55):
"CHILE: MAJOR STRUCTURAL REFORMS OF THE 1970s
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Situation in 1972-73 | Post-1973
--------------------------------------------------------------------------
Privatization
More than 500 commercial firms By 1980, only 25 firms (including
and banks controlled by the state one bank ) remaining in the public
sector
Prices
Price controls Market-determined prices except
wages and exchange rate
Trade and exchange rates
Multiple exchange rate system Homogeneous, unified exchange rate
Prohibitions and quotas on imports
High tariffs (from 94% to 220%) Flat import tariff of 10 percent
Prior deposits for imports (excluding automobiles)
Absence of other trade barriers
Fiscal regime
"Cascade" sales tax Value-added tax of 20 percent
Large public payroll Public employment reduced
Large fiscal deficits Fiscal surpluses in 1979-81
Domestic financial markets
Controlled interest rates Market-determined interest rates
State ownership of banks Reprivatization of banks
Control of credit Liberalization of capital markets
Capital mobility
Total control of capital movements Gradual liberalization of the
capital accounts ( long-term
Government was the main external in 1981, short-term in 1982)
borrower Private external borrowing
became massive
Labour regime
Unions played a large role and had No unions and no collective
considerable bargaining power bargaining power
Worker dismissals prohibited Relaxation of prohibition on
Mandatory wage increases dismissals
High and increasing nonwage labour Relaxation of mandatory wage
costs (40 percent of wages) adjustments and severe cuts in
real wages
Reduction of nonwage labour costs
(to 30 percent of wages)
---------------------------------------------------------------------------
Explaining the extent of the reversing process imposed by the
military regime, Dietz and Street (1987), state: "the depth of the
transformation of the economy in a non-capitalist direction
previous to the crisis forces a new dimension into the orthodox
policies. If there was expropriation of assets and land in the
previous economic scheme, the new policies will almost certainly
seek not only to reverse the trend but to proceed to privatise as
many public enterprises and public sector activities as possible.
Dismantling the public sector may seem the most effective way to
ensure that the socialist "threat" will not be repeated".
Thus for the new regime, eliminating the "threat" was parallel
to ensuring that fast economic growth will follow. They assumed
that all the measures of liberalisation would accelerate the
process of industrialisation, demonstrating how seriously the
economy had been badly managed by the ones who were implementing
"democratic socialist policies". 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.
On the other hand it was expected that unemployment and wages, in
the short-term, while the necessary structural reforms were being
carried out, would rise and decrease respectively, but in the medium and
long-term this would be reversed, that is, unemployment would decrease
and wages would increase. Unfortunately, the pattern which has emerged
in the monetarist period has shown the opposite to be true. Overall,
unemployment and wages, in the long term, have risen and decreased
respectively, as shown in Table 2:
=======================================================
UNEMPLOYMENT AND WAGES IN CHILE: 1970-1989 TABLE 2
UNEMPLOYMENT INDEX OF REAL WAGES
RATE (1970=100)
1970 5.7 100
1971 3.8 125.4
1972 3.1 124.0
1973 4.8 86.0
1974 9.2 90.2
1975 13.5 88.7
1976 15.9 86.3
1977 14.2 96.6
1978 14.2 97.5
1979 13.8 98.7
1980 11.9 108.3
1981 10.9 115.7
1982 20.4 112.2
1983 18.6 100.3
1984 19.3 100.4
1985 16.3 96.6
1986 13.9 98.3
1987 12.8 97.9
1988 11.8 104.2
1989 10.0 106.1
SOURCE: Economic Survey Of Latin America And The
Caribbean 1989, 1984, United Nations
NOTE: Figures For Unemployment And Wages:From
The National Statistical Institute (INE),
==========================================================
Referring to the period 1974-83, Edwards and Cox Edwards (1991,
p.169) comment that " the high level of unemployment observed throughout
the period responded to a number of interrelated factors. First, the
slow average rate of growth of economic activity during the period
resulted in a slow rate of employment creation. Second, the labour force
grew at rates substantially higher than the historical average. Third,
the reduction in the government size generated a major reduction in the
number of jobs, contributing to the overall unemployment problem. And
fourth, the persistence of unemployment responded to a number of
rigidities that precluded a smooth adjustment to various shocks,
including the liberalisation reforms".
From a different angle, referring to both Argentina's and Chile's
market liberalisation period, Tokman (1985, p.83) stated that " wages
became a basic variable in the economic and social policies adopted by
these countries. Wage control was a basic policy instrument in the
effort to achieve price stabilization and an improvement in
international competitiveness"..."Wage control was also used as an
instrument to discipline the labour force, since in both countries the
governments sought to avoid social pressures that might challenge the
economic and political policies".
In spite of the above technical explanations, the pattern suggests
that this is a long term condition that could end up being a permanent
feature of the social and economic structure brought about by market
liberalisation policies in the short term. The same appears to be
happening in the industrialised countries, especially the U.K., with
unemployment in the former maintaining a level of 6-8% and the latter 8-
10%. Wages are also falling in real terms, especially in the U.S.A.,
except in the U.K. where wage growth is slowing down (Economic Trends,
1991).
Foreign Indebtness, Income Distribution and Poverty
Accumulation of capital during this period was mainly achieved
through external borrowing. The result was a huge foreign debt,
exacerbated by the sudden rise in international interest rates ( in real
terms they were negative from 1975-77, shooting up to more than 5% after
1981, Branford and Kucinski, 1988) and which culminated in the financial
crisis of the 1980s. Table 3 illustrates the case for Chile:
=======================================================================
CHILE'S FOREIGN DEBT: 1973-1982 (MILLIONS OF U.S. $) TABLE 3
PUBLIC SECTOR PRIVATE SECTOR DEBT
TOTAL DEBT DEBT BANKS INDIVIDUALS TOTAL PRIVATE
1973 3,667 3,244 N.A. N.A. 423
1974 4,435 3,966 N.A. N.A. 469
1975 4,854 4,068 154 632 786
1976 4,720 3,762 168 790 958
1977 5,201 3,917 309 975 1,284
1978 6,664 4,709 660 1,295 1,955
1979 8,484 5,063 1,968 1,453 3,421
1980 11,084 5,063 3,497 2,524 6,021
1981 15,542 5,542 6,516 3,561 10,077
1982 17,153 6,660 6,613 3,880 10,493
SOURCE: Banco Central De Chile, As Printed in S. Edwards And A.
Cox Edwards, "Monetarism And Liberalization. The Chilean
Experiment", The University of Chicago Press, 1991, p.71)
========================================================================
In nominal terms, during the period 1973-82, Chile's total foreign
debt increased 4.7 times, total public sector foreign debt increased 2.1
times, total private sector foreign debt increased 24.8 times, and
within the latter, total private banks foreign debt increased 42.9 times
and total individuals foreign debt increased 6.1 times.
From the above, it is clear that the main agents responsible for
the increased foreign debt were private banks and individuals.
Fortin (1985, p.144) stated that this foreign borrowing wasn't
utilized to expand the productive basis of the economy, but mainly for
speculative banking purposes, "had those financial flows been devoted to
expanding the productive base of the economy, there interruption in 1982
would not have produced the catastrophic effects that it did. Instead, a
good deal was devoted to catering for the luxury consumption of the
rich:in the period 1973-82 real average per capita, gross domestic
investment in fixed capital was 20% less than in 1965-70."...he added
that this happened because of " the overall monetarist philosophy
underlying the model and with its politico-economic logic which was one
of bias in favour of the financial and against the industrial sectors".
Maybe the so called de-industrialisation process in the U.K in
recent years can be attributed to the same causes highlighted by Fortin.
When the private banking system collapsed in 1982, the government
stopped for a while liberalising the market, and the state came to the
rescue of the banks and financial companies by undertaking to be
guarantors of the private sector's foreign debt. This is very well
illustrated in Table 4:
===============================
TABLE 4
PRIVATE SECTOR DEBT AS %
OF TOTAL FOREIGN DEBT
1973 11.5%
1974 10.6%
1975 16.2%
1976 20.3%
1977 24.7%
1978 29.3%
1979 40.3%
1980 54.3%
1981 64.8%
1982 61.2%
1983 42.3%
1984 33.2%
1985 25.7%
1986 17.5%
1987 13.7%
1988 15.5%
1989 24.1%
================================
This type of periodical crisis had a very dramatic effect at the
social level. The aggregate measure of this, apart from that of
unemployment, is the pattern of income distribution. I will look at this
now, starting with Table 5:
======================================================================
CHILE: INCOME DISTRIBUTION TABLE 5
(HOUSEHOLDS)
% OF GROWTH
QUINTILE 1969 1978 1988 1969-88
POOREST 20% 7.7% 5.2% 4.4% -42.9%
20% 12.1% 9.3% 8.2% -32.2%
20% 16.1% 13.6% 12.6% -21.7%
20% 21.0% 21.0% 20.0% -4.8%
RICHEST 20% 43.2% 51.0% 54.9% +27.1%
SOURCE: Instituto Nacional De Estadisticas, Santiago
(Published in Analisis, 25th May 1990, 9913-15,
Santiago, Chile, translated by R. Rojas)
======================================================================
The above table illustrates the fact that monetarist policies have
been creating a dramatic increase in the level of poverty. Eighty per
cent of the population saw its share of national income fall, with a
dramatic decrease for the poorest 60% of households.
Furthermore, utilizing Table B in the statistical appendix, we can
measure the real dimension of this poverty by calculating income per
capita in constant money (US$ 1987). (In Table 6).
=====================================================================
CHILE: INCOME PER CAPITA IN US$ OF 1987 TABLE 6
% OF GROWTH
1969 1978 1988 1969-1988
(US$ 1987) (1580) (1300) (1520)
POOREST 20% 608.3 338.0 334.4 -45.0%
20% 955.9 604.5 623.2 -34.8%
20% 1271.9 884.0 957.6 -24.7%
20% 1659.0 1365.0 1520.0 -8.4%
RICHEST 20% 3412.8 3315.0 4172.4 +22.3%
(SOURCE: INE, Santiago De Chile And Table B)
=======================================================================
The above table describes how the income differentials between the
poorest and the richest has from 1969 - 1988 increased by more than
123%, clearly indicating extreme polarisation. The income differential
between the poorest and the richest brackets was 5.6 times in 1969, 9.8
times in 1978 and 12.5 times in 1988.
There are also striking similarities with the pattern of income
distribution in Brazil ( see Table 7) who were also implementing,
sporadically, market liberalisation policies.
=====================================================================
BRAZIL: INCOME DISTRIBUTION, 1960,1970,AND 1980 TABLE 7
% OF GROWTH
1960 1970 1980 1960-1980
QUINTILES
POOREST 20% 3.5% 3.3% 3.2% -8.6%
20% 8.1% 6.8% 6.6% -18.5%
20% 13.9% 11.2% 10.0% -28.1%
20% 20.3% 17.2% 17.1% -15.8%
RICHEST 20% 54.4% 61.7% 63.3% +16.4%
(SOURCE: Kim, K. And Ruccio, D., "Debt And Development In Latin
America", Notre Dame, 1985, P.55)
======================================================================
Even when in both countries , the modernizing drive was relying
upon squeezing the income of the bottom 80% of the population, there is
a fundamental difference: in the Chilean case, the poorest 60% were
targeted to pay the costs, but in Brazil it was the middle 60%. One
explanation could be that in Brazil the income of the poorest 20% was so
low that in real terms there wasn't any room to squeeze them more. In
Chile, specially up to 1972, the poorest 20% received a relatively
higher income by Latin American standards ( Cardoso and Helwege, 1992)
perhaps reflecting also a relatively higher level of development.
The other difference is that, measured in US$ (1987), the income
per capita went up from 1200 dollars in 1970 to 2060 dollars in 1980,
unlike in Chile, where the income per capita went down from 1580 dollars
in 1969 to 1520 dollars in 1988. Consequently the bottom 60% in Chile
were absolutely poorer in 1988 and the middle 60% in Brazil were
relatively poorer in 1980.
Table 7 also allows us to measure relative poverty. If we take one
of the standard measures (half of national income per capita) then the
poverty line reached more than 20% of the households in Chile in 1969,
and in 1980 it reached more than 40%. Thus, the monetarist experiment
doubled the amount of the population on or below the poverty line.
Furthermore in 1988, the same 40% were earning less money in real terms
than in 1969, which can lead to the conclusion that the monetarist
experiment created both relative and absolute poverty to an extent
unknown in Chilean society in the previous decades.
It is clear from the current research that this polarization
in the distribution of income, is a general feature of pursuing market
liberalisation policies. One theoretical explanation I found interesting
was the one put forward by Sundrum (1992, p.273). He argues that when
market liberalization is applied in countries where there is already a
polarised distribution of income, the effects is that the latter become
even more polarized. He states that "the main reason is that even when
markets function efficiently in a competitive and equilibrium manner,
they only respond to effective demand based on the prevailing
distribution of income and assets. The allocation of resources is then
optimal only with reference with that distribution of income. But if
that distribution of income is very unequal, the market allocation of
resources may not be desirable from a social point of view and may only
serve to perpetuate the inequality of income distribution. Therefore it
may be necessary to regulate markets to achieve a more desirable
allocation of resources from a distributional point of view".
(Underlined by K.Coughlan).
Sharing this theoretical point of view, the World Bank in its
"World Development Report 1991. The Challenge of Development"(p.11),
stated that "investing in people requires an efficient public role.
Markets alone generally do not ensure that people, especially the
poorest, receive adequate education, health care, nutrition and access
to family planning", and that "experience shows that success in
promoting economic growth and poverty reduction is most likely when
governments complement markets" (p. iii).
In the case of Chile, the government has been "complementing" the
market in a mixed way. On the one hand the share of total government
expenditure on health went down from 8.9% in 1970 to 7.9% in 1983,
education from 13.1% to 11.9%, while defence went up from 10.2% to
16.0%, (Meller, 1990). On the other hand, in real terms, "preliminary
evidence suggests for 1988, that social expenditures in the health and
housing sectors have increased"..."90% of public investments have been
targeted to the poor, and the selection of beneficiaries is fair and
transparent" (World Bank, 1989, pp.80-81).
One could draw the conclusion that the poorest sectors of society
are so poor that they are a potential political danger, which the
government must try its best to avoid.
Industrialisation, Exports of Manufactured Goods and Inflation
A look at Table 8 below indicates that even when the growth of
exports was quite substantial, still at the end of the period Chile was
a mineral exporter. From table A and table I in my statistical appendix,
we can see that in the period 1974-88 the growth of merchandise exports
averaged 6.3% a year, while in the period 1974-89 the annual rate of
growth of GDP was 3.2%. This indicates that because exports were growing
faster than the domestic economy, there must have been a strong pressure
for an increase in imports, adding to potential difficulties with
balance of payments.
=====================================================================
CHILE: THE EVOLUTION OF EXPORTS 1971-1989 TABLE 8
(MILLIONS U.S.$)
YEARS MINING AGRICULTURE MANUFACT TOTAL
1971 813.2 29.4 119.6 962.2
1975 1075.4 86.1 390.6 1552.1
1977 1403.2 159.5 627.6 2190.3
1979 2253.9 264.5 1245.0 3763.4
1981 2279.1 365.4 1286.0 3930.7
1983 2296.6 327.5 1211.4 3885.5
1986 2095.0 683.0 1420.0 4198.0
1987 2604.O 797.0 1824.0 5225.0
1988 3848.0 931.0 2273.0 7052.0
1989 4472.0 995.0 2613.0 8080.0
PERCENTAGE BREAKDOWN
1971 84.5 3.1 12.4 100.0
1975 69.3 5.5 25.2 100.0
1977 64.1 7.3 28.6 100.0
1979 59.9 7.0 33.1 100.0
1981 58.0 9.3 32.7 100.0
1983 59.1 8.4 32.5 100.0
1986 49.9 16.3 33.8 100.0
1987 49.8 15.3 34.9 100.0
1988 54.6 13.2 32.2 100.0
1989 55.3 12.3 32.4 100.0
(SOURCE:"Economic Survey of Latin America And The Caribbean",
United Nations, 1989, 1984.)
======================================================================
My statistical appendix includes data for five Latin American
countries and for South Korea with the purposes of comparing
performances. The period 1974-1989 shows that the growth of GDP was
8.7% for South Korea, 3.9% for Brazil and Colombia, 3.4% for Mexico and
3.2% for Chile, and Argentina nil. The growth of exports was 15.5% for
South Korea, 11.5% for Mexico, 8.8% for Brazil, 6.3% for Chile, 5.4% for
Colombia and 2.9% for Argentina (tables A and I). In comparative terms,
Chile's performance is not that spectacular, but rather poor.
As has been stated before in this essay, one main aim of market
liberalisation is to transform the economy to become an exporter of
manufactured goods. From Table 8, this doesn't appear to be a clear case
for Chile. In 1989, mining and agriculture accounted for almost 68% of
total exports. Furthermore, during the period under consideration, the
international price of copper decreased steadily, which accounts for a
significant part of the declining share of mining in total exports
(Edwards and Cox Edwards, 1991). Moreover the only spectacular growth
was in agricultural exports. This seems to reflect what was happening in
the economy at large, if we look at tables E, F, G and H. The share of
the manufacturing sector between 1974-1989 decreased at an annual rate
of 1.2%, as compared with South Korea's 3.79% increase and 0.19%
increase for Mexico's. Brazil's decreased at an average of 0.46. On the
other hand the agricultural sector grew in Chile, at an average of .34%,
while in South Korea and Mexico it decreased at 6.3% and 1.6%
respectively, probably showing a pattern of industrialisation in the two
latter countries, and not in Chile. In the industrial sector as a whole,
Chile had a negative growth of .8% while Colombia, Mexico and Brazil
showed positive growth, and only Argentina in my group had a negative
growth also.
Another important finding is illustrated in Table 9 :
=====================================================================
CHILE: THE EVOLUTION OF MANUFACTURED PRODUCTS EXPORT 1971-1989
(MILLIONS OF U.S. $) TABLE 9
METALLIC BASIC TOTAL
FISH PAPER MACHIN METAL MNFG. FOOD AND
YEARS MEAL TIMBER PRODCT. CHMLS. ELCTRN. INDUST. EXP. BEVERAGES
1971 29.8 7.0 32.0 11.8 4.4 9.0 119.6 -
1975 29.2 25.2 93.7 46.4 42.4 58.6 390.6 -
1977 86.5 70.4 134.4 77.9 36.8 103.7 627.6 -
1979 152.6 164.7 238.8 128.2 59.5 306.5 1245.0 -
1981 202.0 158.5 259.0 143.0 45.1 235.0 1286.0 -
1983 307.1 116.4 208.0 109.8 20.3 285.5 1211.4 -
1986 315.0 135.0 272.0 89.0 31.0 281.0 1420.0 215.0
1987 363.0 217.0 365.0 102.0 39.0 349.0 1824.0 281.0
1988 458.0 311.0 417.0 186.0 39.0 383.0 2273.0 331.0
1989 508.0 345.0 422.0 284.0 52.0 415.0 2613.0 387.0
PERCENTAGE BREAKDOWN
1971 24.9 5.8 26.8 9.9 3.7 7.5 100.0
1975 7.5 6.5 24.0 11.9 10.9 15.0 100.0
1977 13.8 11.2 21.4 12.4 5.9 16.5 100.0
1979 12.3 13.2 19.2 10.3 4.8 24.6 100.0
1981 15.7 12.3 20.1 11.1 3.5 18.3 100.0
1983 25.4 9.6 17.2 9.1 1.7 23.6 100.0
1986 22.2 9.5 19.2 6.3 2.2 19.8 100.0 15.1
1987 19.9 11.9 20.0 5.6 2.1 19.1 100.0 15.4
1988 20.1 13.7 18.3 8.1 1.7 16.8 100.0 14.6
1989 19.4 13.2 16.2 10.9 2.0 15.9 100.0 14.8
(Source: "Economic Survey for Latin America and The Caribbean", United
Nations, 1984, 1989)
========================================================================
Chilean exports of manufactured goods, in general, maintained
the old pattern where the traditional exports (fish meal, timber and
paper products) accounted for about half of them. Among the non-
traditional, chemicals maintained its share of around 9-11%, metallic
machinery and electronics went down from about 4% to 2%. The only
spectacular growth was basic metal industries which doubled its share.
In aggregate terms traditional exports of manufactured goods went
down from 55.7% of the total in 1971 to 48.8% in 1989, and the non-
traditional went up from 21.1% to 28.8%, but it is not clear that this
is a trend, because in both cases there were marked cycles.
In addition, market liberalisation theory gives to foreign direct
investment (FDI) a crucial role for the success of industrialising the
economy, especially because it is assumed FDI will be attracted to those
economies that are liberalising. This does not appear to be the case
with Chile, at least in the period 1982-89:
======================================================================
FOREIGN DIRECT INVESTMENT (MILLIONS OF U.S.$) TABLE 10
CHILE COLOMBIA
384 337
131 514
67 561
62 1016
57 562
97 287
109 186
261 468
SOURCE: Economic Survey Of Latin America And The Caribbean, 1989
=======================================================================
The interest for investing in Chile appears to be weaker than in
Colombia. But the profitability of FDI is higher in Chile than in
Colombia: in nominal terms the total profits remitted abroad on the
above figures were 1666 million for Chile and 3606 million for Colombia
giving a nominal rate of profit of 143% in Chile and 92% in Colombia.
A different case has been portfolio investment which went up from
50 million U.S. dollars in 1985 to 1321 million U.S. dollars in 1989
(United Nations, 1989), showing that international capital is more
interested in buying shares of Chilean businesses already established by
Chilean capital than creating new units of production with direct
investment. This means that foreign capital, apart from not adding
substantially to capital formation in the country, is acquiring
ownership of Chilean companies.
Finally, there have been two considerable successes in the last 16
years. One was managing a balanced budget (Meller, 1991, and Edwards and
Cox Edwards, 1991) and the other, the fight against inflation. Table 11
gives an account of the success on stabilising prices: Chile was able to
bring down its rate of inflation from 375% in 1975 to only 17% in 1989,
while Argentina's and Brazil's increased dramatically from 183% to 3400%
and from 29% to 1300% respectively. Both Colombia and Mexico ended up
with slightly higher rates of inflation. Only Korea achieved near to the
success of Chile. On the other hand, one cannot take these successes on
their own. One has to look at the whole picture where income
distribution, poverty, unemployment, and other social indicators must be
taken into consideration.
========================================================================
GOING RATE OF INFLATION TABLE 11
1975 1989
ARGENTINA 183% 3400%
BRAZIL 29% 1300%
CHILE 375% 17%
COLOMBIA 23% 26%
KOREA 25% 6%
MEXICO 16% 20%
SOURCE: Table J in the Statistical Appendix
=======================================================================
CONCLUSIONS
Any conclusions about the effects of monetarist policies being
applied in Third World countries must take into account, firstly, the
dynamics of the global economy because of the high degree of
interdependency among countries. As Griffith-Jones (1981, pp.3-5) points
out " the implementation of monetarist policies in the industrialised
countries (and particularly in the United States) has a dramatic effect
on the international framework within which developing countries have to
operate, seriously constraining their own options for growth and
development. Developing countries are doubly hit by monetarist policies
in the industrial countries (and particularly in the U.S.). Contraction
of economic activity in industrial countries leads to slower growth or
decline in the export markets of the Third World, affecting both their
industrial and commodity exports. Simultaneously, the very high interest
rates of the last two years, particularly, but not only in the U.S., has
dramatically increased the debt burden of the developing countries".
Secondly, as stated at the beginning of this extended essay, the
clear connections with I.M.F. development ideology must be considered.
Meller, (1991, pp.1545-46) suggests that " the adjustment experiment of
the 1980s is even more noteworthy because it relied heavily on orthodox
"free market" measures and closely followed traditional World Bank and
International Monetary Fund (IMF) thinking on adjustment. It should
therefore provide insights about the results one could expect from
traditional World Bank and IMF adjustment policy programs, especially
because both multilateral organisations were active in Chile during this
period".
Social costs which IMF adjustment policy programs bring about are
very well documented. For instance Cardoso and Helwege (1992, p.30)
summarise "stabilisation programs in themselves are not solutions to
poverty. Austerity, the elimination of subsidies and devaluations often
hurt the poor in the short-run. Structural adjustment loan programs help
restore Latin American solvency, but they are no Alliance for Progress".
In accordance with the above, whatever the economic successes or
failures of market liberalisation policies, whether imposed by the IMF
or freely adopted by governments in Third World countries, they will
produce dramatic social costs, at least in the short-term. Nevertheless
I think, like I expected my essay to show, these social effects will be
long-term as well. This is because the policies of adjustment treat
differently, different sectors of the population: "owners of real and
financial assets received "protection" during the adjustment, and
depositors had their savings accounts insured by the government and
indexed for inflation. Workers in contrast, faced heavy income losses
through wage deindexation and unemployment. The authorities show a clear
preference for regressive measures as they provided generous subsidies
to dollar debtors, and reduced subsidies to the unemployed. While
600,000 unemployed were receiving 1.5% of GDP as unemployment subsidy
and another 600.000 unemployed received nothing, fewer than 2,000 dollar
debtors were receiving subsidies totalling 3% of GDP". (Mellor, 1991,
p.1559).
My essay has demonstrated that the monetarist experiment in Chile,
apart from contributing to further social polarisation, did not
contribute much to economic development, because the overall performance
was poor as related to economic growth, industrialisation, export-led
strategy and achievement of full employment. It was extremely poor in
reducing poverty. The only successes were fighting inflation and
balancing the budget.
It looks as if Griffith-Jones's analysis (1981, p.5) that "the
social cost of monetarism in the industrial countries will be attenuated
by the existence of social security and unemployment benefits"..."the
social costs will also be moderated by political opposition to
monetarism, which, fortunately, can probably not be repressed", and
O'Brien's words (1981, p.50) "unfortunately, in underdeveloped
capitalist countries, where democratic procedures and institutions are
virtually non-existent, or extremely fragile, resistance is met by
repression. In these countries the Chicago model will necessarily be
accompanied by dictatorship, repression and misery for the mass of the
population", were very accurate.
Even the World Bank (1991, 11) is recognising the potential dangers
of the social effects of such a strategy and it recommends to developing
countries to "invest in people. Government must spend more, and more
efficiently, on primary education, basic health care, nutrition and
family planning. That requires shifts in spending priorities; greater
efficiency and better targeting of expenditures, and in some cases
greater resource mobilisation", all of this to alleviate poverty. But
still the Bank insists in that " governments need to intervene less in
industrial and agricultural pricing, to deregulate restrictions to entry
and exit, and to focus instead on ensuring adequate infrastructure and
institutions"... "open economies to international trade and investment".
The Bank, then, is recommending that Third World countries keep on
implementing market liberalisation policies which like we saw in this
essay are the ones which create dramatic social inequalities, this is a
contradiction with their recommendations to fight poverty. Only time
will tell what will be the result of this contradiction.
=========
BIBLIOGRAPHY
Beccaria, L. & Carciofi, R. "Recent Experiences Of Stabilisation:
Argentina's Economic Policy 1976-81", in IDS
Bulletin, Dec 1981, Vol.13 No.1
Branford, S. & Kucinski, B., The Debt Squads, 1988
Cardoso, E. & Helwege, A., "Below The Line: Poverty In Latin
America", in World Development, Vol.20., No.1, 1992
CSO, Economic Trends, Year Book, 1991
Dietz, J. & Street, J. Latin America's Economic
Development:Institutionalist And
Structuralist Perspectives, 1987
Duran, E., Latin America and The World Recession, 1985
Edwards, S. & Cox Edwards, A., Monetarism and Liberalization:
The Chilean Experiment, 1991
Fortin, C. "Chile 1973-85 - The Failure of Monetarism" in
Development Policy Review, Vol.3, 1985
Hunt, E. K. & Sherman, H. J., Economics: An Introduction to
Traditional and Radical Views, 1990
IDS Bulletin, 'Monetarism' and the Third World, Dec. 1981
Kim, K. & Ruccio, D., Debt and Development in Latin
America, 1985
Korner et al, The IMF And The Debt Crisis: A Guide To The
Third World's Dilemma, 1986
Loveman, B., Chile: The Legacy of Hispanic Capitalism, 1988
Meller, P. "Adjustment And Social Costs In Chile During The
1980s" in IDS Bulletin, Dec 1981 Vol.13 No.1
O'Brien, P. "The New Leviathan: The Chicago School And The
Chilean Regime 1973-80" in IDS Bulletin, Dec 1981
Vol.13 No.1
Rojas Sandford, R., The Murder of Allende and The End Of The
Chilean Way To Socialism, 1975
Rojas, R., Lecture Notes, Academic Year 1992
Sundrum, R. M., Income Distribution in Less Developed
Countries, 1992
Tokman, V. "Wages And Employment In International,
Recessions:Recent Latin American Experience" in
Kim, K. & Ruccio, D., 1985
United Nations, Economic Survey of Latin America and The
Caribbean, 1989, 1984
Williamson, J. (ed), Latin American Adjustment: How Much Has
Happened?, 1990
World Bank, Trends In Developing Economies, 1989
World Bank, World Development Report 1991, 1991
Zammit, J. A. (Ed.), The Chilean Road To Socialism, 1973
===================
STATISTICAL APPENDIX
The data included in this appendix was mainly supplied by handouts
from the Third World Studies Option, during the academic year 1991-1992.
The source of the data is from the World Bank's World Tables 1991,
supplied as computer software.
-----------------------------------------------------------------
WORLD TABLES 1991 Index 1969=100 TABLE A
GDP at market prices (local) (Const. Price)
Argentina Brazil Chile Colombia Korea Mexico
1969 100.0 100.0 100.0 100.0 100.0 100.0
1970 105.2 108.7 102.0 107.1 108.9 107.3
1971 109.3 121.0 111.3 113.5 119.8 111.8
1972 111.6 135.9 110.0 122.2 126.8 121.3
1973 115.6 155.4 103.9 130.4 146.1 131.2
1974 122.0 169.4 104.8 137.9 159.1 139.2
1975 121.4 178.3 90.9 140.8 171.3 147.1
1976 121.1 195.7 94.2 147.5 194.4 153.3
1977 129.0 204.7 103.4 153.5 215.7 158.3
1978 124.6 211.3 112.1 166.5 239.3 171.3
1979 133.6 225.6 121.4 175.5 257.2 187.2
1980 136.2 246.5 130.9 182.7 248.7 202.9
1981 126.8 235.7 138.1 186.6 265.8 220.7
1982 119.8 237.2 118.5 188.5 285.4 219.3
1983 123.3 229.0 117.7 191.5 319.8 210.1
1984 126.3 241.0 125.2 198.3 349.3 217.8
1985 120.8 260.7 128.2 204.8 373.4 223.8
1986 127.3 281.8 135.4 217.4 419.4 215.1
1987 130.3 291.1 143.2 229.0 468.2 218.8
1988 126.7 290.9 153.8 237.4 520.9 221.7
1989 121.9 301.4 169.1 245.1 554.4 228.5
1990
Annual
Rate of
Growth
1969-1972 3.7 10.8 3.2 6.9 8.2 6.6
1974-1989 -0.0 3.9 3.2 3.9 8.7 3.4
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE B
Gross national income per capita (1987 USD) CONSTANT PRICES
Argentina Brazil Chile Colombia Korea Mexico
1969
1970 2,630 1,200 1,580 760 970 1,310
1971 2,720 1,300 1,670 790 1,040 1,320
1972 2,730 1,430 1,590 830 1,080 1,380
1973 2,810 1,610 1,520 880 1,220 1,440
1974 2,870 1,690 1,510 900 1,280 1,490
1975 2,800 1,720 1,090 890 1,310 1,520
1976 2,760 1,860 1,150 940 1,500 1,550
1977 2,880 1,920 1,230 990 1,640 1,550
1978 2,740 1,900 1,300 1,040 1,810 1,640
1979 2,910 1,960 1,430 1,050 1,900 1,770
1980 2,950 2,060 1,510 1,070 1,710 1,920
1981 2,710 1,890 1,500 1,050 1,770 2,050
1982 2,420 1,830 1,200 1,030 1,900 1,960
1983 2,460 1,720 1,190 1,030 2,110 1,740
1984 2,510 1,780 1,170 1,040 2,280 1,780
1985 2,360 1,890 1,200 1,040 2,400 1,790
1986 2,470 2,040 1,260 1,110 2,740 1,590
1987 2,450 2,070 1,390 1,100 3,090 1,620
1988 2,360 2,030 1,520 1,080 3,450 1,630
1989 2,210 2,080 1,630 1,130 3,730 1,670
1990 2,180 1,960 1,570 1,110 4,040 1,730
Annual
Rate of
Growth
1971-1990 -1.16 2.18 -0.32 1.81 7.40 1.43
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE C
Gross domestic investment p/capita (1987 USD) CONST. PRICES
Argentina Brazil Chile Colombia Korea Mexico
1969
1970 720 310 310 190 220 360
1971 780 340 300 190 240 330
1972 780 390 210 180 220 350
1973 730 470 190 190 270 390
1974 720 540 330 230 340 450
1975 730 580 150 180 330 460
1976 760 570 150 190 370 430
1977 910 550 180 220 460 420
1978 750 560 210 230 590 460
1979 810 550 270 220 670 530
1980 870 600 350 240 520 630
1981 660 510 420 270 530 710
1982 520 460 140 280 560 520
1983 460 350 120 260 630 370
1984 400 350 200 240 710 390
1985 320 410 180 220 730 420
1986 370 490 210 220 810 320
1987 430 470 260 230 920 330
1988 390 430 270 240 1,030 370
1989 290 450 350 220 1,310 370
1990 280 430 340 210 1,540 400
Annual
Rate of
Growth
1974-1990 -5.73 -1.41 0.19 -0.57 9.90 -0.73
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE D
Gross domestic product (Av. annual growth, %)
Argentina Brazil Chile Colombia Korea Mexico
1969
1970 5.2 8.7 2.0 7.1 8.9 7.3
1971 3.8 11.3 9.1 6.0 10.0 4.2
1972 2.1 12.3 -1.1 7.6 5.8 8.5
1973 3.6 14.4 -5.5 6.7 15.2 8.2
1974 5.5 9.0 0.8 5.7 8.9 6.1
1975 -0.5 5.2 -13.2 2.1 7.7 5.7
1976 -0.2 9.8 3.6 4.8 13.5 4.2
1977 6.5 4.6 9.8 4.1 11.0 3.2
1978 -3.4 3.2 8.4 8.4 10.9 8.2
1979 7.2 6.8 8.3 5.4 7.4 9.3
1980 1.9 9.3 7.8 4.1 -3.3 8.4
1981 -6.9 -4.4 5.6 2.1 6.9 8.8
1982 -5.5 0.6 -14.2 1.0 7.4 -0.6
1983 2.9 -3.5 -0.7 1.6 12.1 -4.2
1984 2.5 5.2 6.3 3.6 9.2 3.7
1985 -4.4 8.2 2.4 3.3 6.9 2.7
1986 5.4 8.1 5.7 6.1 12.3 -3.9
1987 2.3 3.3 5.7 5.4 11.6 1.7
1988 -2.7 0.0 7.4 3.6 11.3 1.3
1989 -3.8 3.6 9.9 3.3 6.4 3.1
1990 -1.1 -3.3 1.6 3.5 9.3 3.4
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE E
MANUFACTURING SECTOR -SHARE OF GROSS DOMESTIC PRODUCT
value added (local currency) (Const. Price)
Argentina Brazil Chile Colombia Korea Mexico
1969 29.3 30.3 24.6 20.9 11.8 25.5
1970 27.1 30.1 24.5 20.7 13.1 25.7
1971 27.7 30.2 25.6 21.2 14.1 25.7
1972 28.2 30.7 26.4 21.8 15.2 26.0
1973 28.3 31.2 25.8 22.1 17.2 26.5
1974 28.4 30.7 25.0 22.6 18.4 26.6
1975 27.8 30.4 21.4 22.4 19.1 26.4
1976 27.0 30.9 21.9 22.3 21.1 26.6
1977 27.4 30.3 21.7 21.8 21.9 26.7
1978 25.3 32.6 21.9 22.1 24.1 27.0
1979 26.0 32.6 21.8 22.2 24.8 27.4
1980 24.7 32.5 21.4 21.6 25.3 27.0
1981 22.3 30.7 20.8 20.6 26.1 26.5
1982 22.3 30.4 19.2 20.1 25.9 25.9
1983 23.8 29.7 19.9 20.0 26.8 25.0
1984 24.1 30.0 20.6 20.5 28.8 25.4
1985 22.6 30.2 20.3 20.4 28.8 26.2
1986 24.2 31.0 20.8 20.4 30.4 25.7
1987 23.4 30.4 20.7 20.3 32.2 25.9
1988 22.5 29.3 20.9 20.0 32.7 26.1
1989 22.3 28.7 21.0 20.1 32.1 27.3
1990
Annual
Growth
1974-1989 -1.60 -0.46 -1.16 -0.79 3.79 0.19
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE F
AGRICULTURAL SECTOR -SHARE OF GROSS DOMESTIC PRODUCT
value added (local currency) (Const. Price)
Argentina Brazil Chile Colombia Korea Mexico
1969 15.4 12.7 7.3 22.3 32.8 11.5
1970 13.3 11.7 7.4 21.5 29.9 11.2
1971 13.0 11.5 6.7 20.4 28.1 11.4
1972 13.0 10.7 6.2 20.4 27.2 10.6
1973 13.8 9.3 6.0 19.5 25.5 10.1
1974 13.5 8.6 7.5 19.5 25.2 9.8
1975 13.2 8.8 9.0 20.1 24.4 9.5
1976 13.8 8.2 8.6 19.9 23.8 9.2
1977 13.3 8.8 8.6 19.7 22.1 9.6
1978 14.1 8.3 7.7 19.6 18.0 9.3
1979 13.6 8.1 7.5 19.5 18.0 8.4
1980 12.6 8.1 7.2 19.2 14.9 8.3
1981 13.8 9.2 7.1 19.4 16.0 8.1
1982 15.5 9.1 8.2 18.8 16.0 8.0
1983 15.4 9.4 8.0 19.1 15.4 8.5
1984 15.5 9.2 8.1 18.7 13.9 8.4
1985 16.0 9.4 8.4 18.4 13.5 8.5
1986 14.8 8.0 8.6 18.0 12.6 8.7
1987 14.6 8.9 8.4 18.1 10.5 8.6
1988 15.2 9.0 8.2 17.9 10.3 8.4
1989 13.4 8.9 7.9 18.2 9.5 7.7
1990
Annual
Growth
1974-1989 -0.0207 0.2067 0.3424 -0.4440 -6.2874 -1.5625
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE G
SERVICES SECTOR -SHARE OF GROSS DOMESTIC PRODUCT
value added (local currency) (Const. Price)
Argentina Brazil Chile Colombia Korea Mexico
1969 43.9 45.8 51.0 44.6 46.2 54.4
1970 48.6 47.2 51.0 46.0 47.8 54.1
1971 47.8 47.1 51.3 46.8 49.1 54.6
1972 47.3 47.3 52.2 46.1 49.3 54.9
1973 47.4 47.7 53.2 46.2 48.6 54.5
1974 47.6 48.8 49.7 46.3 47.6 54.5
1975 48.0 48.8 52.5 46.3 47.2 55.0
1976 47.1 48.7 52.8 46.7 46.0 55.0
1977 46.9 48.7 54.1 47.7 46.0 54.9
1978 47.9 45.9 55.4 48.0 46.9 54.4
1979 48.2 46.1 55.3 48.2 46.6 54.7
1980 50.2 46.2 55.5 48.7 48.8 54.4
1981 51.4 46.9 55.3 49.4 47.8 54.6
1982 50.4 47.2 54.5 50.4 47.5 55.2
1983 49.7 47.9 54.2 49.6 46.3 56.3
1984 50.1 47.6 53.7 49.0 45.8 56.1
1985 50.8 47.0 53.0 48.4 46.2 55.3
1986 50.4 46.9 52.8 47.3 45.8 55.9
1987 51.0 46.9 53.4 46.9 46.0 55.6
1988 51.0 48.0 53.6 47.4 46.1 55.9
1989 54.2 48.0 54.0 47.2 46.8 55.4
1990
Annual
Growth
1974-1989 0.8793 -0.1091 0.5499 0.1232 -0.1122 0.1080
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE H
INDUSTRIAL SECTOR -SHARE OF GROSS DOMESTIC PRODUCT
value added (local currency) (Const. Price)
Argentina Brazil Chile Colombia Korea Mexico
Industry Industry Industry Industry Industry Industry
1969 40.7 41.5 41.7 33.2 21.0 34.1
1970 38.2 41.1 41.6 32.5 22.4 34.7
1971 39.2 41.3 41.9 32.8 22.7 34.0
1972 39.7 42.0 41.5 33.5 23.5 34.5
1973 38.7 43.0 40.8 34.3 25.9 35.3
1974 38.9 42.6 42.8 34.2 27.2 35.7
1975 38.8 42.4 38.5 33.5 28.4 35.5
1976 39.0 43.1 38.7 33.4 30.1 35.9
1977 39.8 42.6 37.3 32.6 31.8 35.5
1978 37.9 45.8 36.9 32.3 35.1 36.3
1979 38.2 45.8 37.2 32.3 35.4 37.0
1980 37.2 45.7 37.3 32.1 36.2 37.3
1981 34.8 43.9 37.6 31.2 36.2 37.4
1982 34.0 43.7 37.3 30.8 36.5 36.9
1983 35.0 42.6 37.8 31.3 38.3 35.2
1984 34.5 43.2 38.2 32.3 40.3 35.5
1985 33.2 43.6 38.6 33.1 40.3 36.2
1986 34.8 45.2 38.5 34.7 41.7 35.5
1987 34.4 44.2 38.2 35.1 43.5 35.8
1988 33.8 43.0 38.2 34.6 43.6 35.8
1989 32.3 43.1 38.1 34.6 43.7 36.8
1990
Annual
Growth
1974-1989 -1.2370 0.0813 -0.7656 0.0766 3.2054 0.2159
-----------------------------------------------------------------
-----------------------------------------------------------------
WORLD TABLES 1991 TABLE I
Growth of merchandise exports (index 1969=100)
Argentin Brazil Chile Colombia Korea, R Mexico
1969 100.0 100.0 100.0 100.0 100.0 100.0
1970 101.7 109.4 115.4 98.1 121.7 87.3
1971 97.6 117.1 113.0 96.3 150.1 91.3
1972 100.3 146.6 98.3 105.9 225.1 116.4
1973 126.8 159.9 83.7 119.4 362.4 129.8
1974 127.5 171.9 143.1 107.0 405.9 114.0
1975 96.4 195.8 144.3 110.9 451.7 114.5
1976 126.3 199.1 178.3 97.4 616.6 118.0
1977 176.8 200.1 181.3 98.5 789.3 135.2
1978 190.4 228.9 200.2 134.5 908.5 200.5
1979 187.1 255.7 230.0 133.8 907.5 217.4
1980 171.4 315.0 249.8 155.3 998.3 272.8
1981 192.3 371.4 234.6 137.5 1190.0 338.0
1982 183.1 353.2 259.4 130.1 1274.5 348.5
1983 175.8 408.3 254.2 127.3 1460.5 424.1
1984 185.4 499.4 262.1 138.9 1726.3 475.0
1985 207.7 516.3 283.1 146.5 1835.1 455.0
1986 177.2 417.7 314.2 185.7 2136.1 470.5
1987 159.4 469.5 323.0 227.6 2687.2 510.5
1988 190.7 560.1 337.6 223.1 3044.6 524.3
1989
1990
Annual
Growth
1974-1988 2.9184 8.8045 6.3212 5.3880 15.4808 11.5161
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WORLD TABLES 1991 TABLE J
Consumer Price Index
Argentina Brazil Chile Colombia Korea Mexico
1969 100 100 100 100 100 100
1970 114 122 132 107 116 105
1971 153 147 159 117 132 111
1972 242 171 278 132 147 116
1973 391 193 1283 160 152 130
1974 483 246 7759 198 189 161
1975 1366 318 36836 244 236 186
1976 7430 451 114859 293 273 215
1977 20508 648 220463 390 300 277
1978 56501 899 308917 460 344 326
1979 146625 1373 411961 573 407 385
1980 294371 2511 556717 725 523 486
1981 601916 5161 666316 924 635 622
1982 1593739 10207 732556 1151 680 989
1983 7073311 24716 932230 1379 704 1995
1984 51403258 73401 1117371 1601 720 3303
1985 396908897 239915 1460444 1986 738 5211
1986 754511827 588380 1744895 2361 758 9704
1987 1745387179 1939640 2091663 2911 781 22497
1988 7731267826 15173793 2398926 3730 837 48180
1989 245839710227 210457680 2807443 4693 885 57820
1990
Annual
Growth
1974-1989 280.6 148.6 48.1 23.5 10.9 48.0
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TABLE K
GDP CHILE
CONSTANT 1940=100
PRICE UK CHILE USA Annual growth
year Pinochet's period
40 100.00 100.00 100.00 1974-89 3.26
41 106.08 98.72 115.43 Democratic periods
42 107.12 103.83 132.40 1957-72 3.78
43 109.12 107.87 153.47 (1973 was a period
44 104.18 109.36 165.03 of civil war)
45 97.72 119.57 162.69 1941-56 3.77
46 97.15 126.81 138.83
47 94.78 118.30 136.30
48 97.25 133.19 141.94
49 100.19 134.26 142.81
50 103.89 141.06 155.27 UNITED KINGDOM
51 106.17 148.72 150.93
52 107.31 158.30 174.88 Thatcher's period
53 112.16 169.79 181.70 1979-1989 1.99
54 116.62 168.72 179.32 Non-monetarist periods
55 120.61 170.21 191.33 1971-78 2.38
56 122.60 171.91 195.43 1963-70 2.86
57 124.98 186.60 198.96 1955-62 2.41
58 125.26 191.91 198.56 1947-54 3.01
59 130.28 191.49 210.14 1940-46 -0.48
60 136.34 206.17 214.81
61 140.82 212.77 220.41
62 142.28 227.02 232.11 UNITED STATES
63 148.27 231.91 241.64
64 156.04 239.15 254.54 1979-1986 2.18
65 159.69 256.17 269.29 1971-78 3.28
66 162.77 274.04 284.86 1963-70 3.70
67 167.33 280.85 292.99 1955-62 2.68
68 174.43 288.94 305.15 1947-54 4.00
69 176.79 298.51 312.58 1940-46 5.62
70 180.68 302.55 311.68
71 185.50 329.79 320.53
72 189.59 325.74 336.48
73 204.62 307.66 353.97
74 202.32 310.64 352.07
75 200.85 270.43 347.64
76 208.54 280.00 364.62
77 210.66 307.66 381.66
78 218.72 332.77 401.84
79 223.59 360.43 411.78
80 218.43 388.51 411.14
81 215.76 410.00 419.08
82 218.71 352.13 408.40
83 226.32 349.79 422.98
84 230.83 371.91 450.17
85 240.03 381.06 462.47
86 245.65 402.55 478.99
87 256.75 425.74 496.71
88 266.87 457.24 518.57
89 272.42 502.69 533.61
Annual Rate of Growth.
UK CHILE USA
1941 6.08 -1.28 15.43
1942 0.98 5.17 14.71
1943 1.86 3.89 15.91
1944 -4.53 1.38 7.53
1945 -6.20 9.34 -1.41
1946 -0.58 6.05 -14.67
1947 -2.44 -6.71 -1.82
1948 2.61 12.59 4.14
1949 3.03 0.80 0.61
1950 3.70 5.07 8.72
1951 2.19 5.43 -2.80
1952 1.07 6.44 15.87
1953 4.51 7.26 3.90
1954 3.98 -0.63 -1.31
1955 3.42 0.88 6.70
1956 1.65 1.00 2.14
1957 1.94 8.54 1.81
1958 0.23 2.85 -0.20
1959 4.01 -0.22 5.84
1960 4.65 7.67 2.22
1961 3.28 3.20 2.61
1962 1.04 6.70 5.31
1963 4.21 2.16 4.10
1964 5.24 3.12 5.34
1965 2.34 7.12 5.79
1966 1.93 6.98 5.78
1967 2.80 2.48 2.85
1968 4.24 2.88 4.15
1969 1.36 3.31 2.44
1970 2.20 1.35 -0.29
1971 2.66 9.00 2.84
1972 2.21 -1.23 4.98
1973 7.92 -5.55 5.20
1974 -1.12 0.97 -0.54
1975 -0.72 -12.95 -1.26
1976 3.83 3.54 4.88
1977 1.02 9.88 4.67
1978 3.83 8.16 5.29
1979 2.23 8.31 2.48
1980 -2.31 7.79 -0.16
1981 -1.22 5.53 1.93
1982 1.36 -14.12 -2.55
1983 3.48 -0.66 3.57
1984 1.99 6.33 6.43
1985 3.99 2.46 2.73
1986 2.34 5.64 3.57
1987 4.52 5.76 3.70
1988 3.94 7.40 4.40
1989 2.08 9.94 2.90
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sources: IMF, WORLD BANK and official statistics
R. ROJAS, research 0101110, "TNCs and the World Economy", in prep.
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end of tables=================
RROJAS RESEARCH UNIT/1992
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