Is Chile a Role Model for Development?

Abstract

The Chilean economy is usually highly praised as having been successful since the imposition of neo-liberal reforms under the dictatorship of general Pinochet in 1973. However, the four decades that have elapsed include sub-periods with quite different policy approaches and notably diverse outcomes; thus, there is neither one unique model nor only one outcome. The four decades’ growth is moderate, averaging 4.2 per cent per year: it averaged 2.9 per cent (meagre) during the 16 years of dictatorship and a good performance of 5.1 per cent during a quarter-century of democracy, albeit with a vigorous 7.1 per cent in the initial years (1990-98) and a modest 3.9 per cent in the last 15 years. Hence, sometimes, Chile has performed closer to becoming a “model” for development, and at other times the opposite or something in between. Focusing on three episodes (1973-81, 1990-95 and 2008-13), we explore the underlying explanatory variables and some lessons for building “a role model for development”.