Chile After Pinochet Aylwin's Christian Democrat Economic Policies for the 1990s

8/13/2019 Chile After Pinochet Aylwin's Christian Democrat Economic Policies for the 1990s

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Society for Latin American Studies (SLAS)

Chile after Pinochet: Aylwin's Christian Democrat Economic Policies for the 1990sAuthor(s): David E. HojmanSource: Bulletin of Latin American Research, Vol. 9, No. 1 (1990), pp. 25-47Published by: Wileyon behalf of Society for Latin American Studies (SLAS)

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Bull.LatinAm.Res.,Vol.9,No.1,pp.25-47,1990. 0261-3050/90$3.00+ .00PrintednGreatBritain. SocietyorLatinAmericantudiesPergamonress lc

Chile after Pinochet: Aylwin's ChristianDemocrat Economic Policies for the 1990s

DAVID E. HOJMANInstitute of Latin American Studies, University of Liverpool, UK

INTRODUCTIONOne of the most characteristic aspects of the economic policies proposed bythe incoming administration of Patricio Aylwin in Chile is their essentialcontinuity with those implemented by the Pinochet regime in the late 1980s.The Aylwin election manifesto promised more government spending in thesocial services, better health care, training schemes for the young un-employed, a higher minimum wage, a more generous programme of in?expensive housing, more taxes for the wealthy, and some tightening of theextremely favourable conditions granted to foreign investment. But, perhapsmore importantly, it offered explicitly to keep most ofthe Pinochet economicpolicies unaltered. Three reasons combined to generate this attitude: first,apart from their unfavourable social effects, the free-market policies of thePinochet regime were perceived as fundamentally successful, both at homeand abroad; second, the Aylwin coalition did not wish to antagonise themilitary; and third, many of the free-market policies were recommended bythe Christian Democrat economists' (and other social scientists') ownanalyses and convictions.

Politically, the objectives of the Aylwin government are to preserve theadvances already achieved in the recovery of democracy, and to extend themby reforming the 1980 Constitution still further (a first round of constitu?tional reform was undertaken after the October 1988 plebiscite), changingthe electoral system to make it more representative, and fighting any threatsto the renewed democratic institutions from the extreme right and theextreme left.1 Economically, the new government aims at preserving andincreasing the spectacular dynamism ofthe Chilean economy which becameevident from the mid-1980s, continuing to guarantee domestic and externalstability, and distributing the fruits of growth more equitably. Success inachieving these political and economic objectives can be condensed into onesingle result: having another Christian Democrat government, or a govern?ment by a coalition in which the Christian Democratic Party (CDP) has asubstantial input, elected in 1993.A high rate of economic growth between 1989 and 1993 will not besufficient to have a Christian Democrat candidate elected to succeed Aylwin,just as the fast growth of the mid- and late-1980s was not enough to haveHernan Biichi (generally acknowledged as the architect of the economic'miracle1) elected to succeed Pinochet. A high rate of growth is not

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26 BULLETIN OF LATIN AMERICAN RESEARCHnecessarily reflected in dramaticaUy increased standards of welfare for themajority. Even according to official data published by the Boletin Mensual(Monthly Bulletin) of the Central Bank, the economic welfare of largenumbers of people has improved very little in real terms since the worstphase of the 1982-1983 recession. Employment has increased more thanreal earnings, but still the overall gains for large segments of the populationcan hardly be described as substantial (Hojman, 1989a). Rapid growth inoutput combined with economic stability is not the same as a more equitablepattern of income and wealth distribution, and it does not necessarilyrepresent political success under democratic conditions. This had alreadybecome apparent from the results of the 1988 plebiscite, in which the 'Yes toPinochet' campaign strongly emphasised the economic 'miracle1 ofthe 1980s(Hojman, 1989b). The Biichi presidential campaign in 1989 acknowledgedthe presence of this dichotomy between economies and politics by giving theeconomic 'miracle' a much lower profile in its publicity than the 'Yes1campaign had given it in 1988.The rapid growth of the Chilean economy was based on a particularlysuccessful combination of export policies and domestic activity. The exportpolicies are well known: they included a realistic exchange rate which waspermanently, but only graduaUy, modified to take into account domestic andinternational price variations and fluctuations in the level of dollar reserves('crawling peg'); low domestic inflation; a low tariff rate with a very smallvariance around the average so as not to punish exporters through excessiveprotection of domestic manufacturers (Corbo and Meller, 1981; Hachette,1985); and aggressive campaigns of marketing abroad together with somefacilities provided by the government for potential exporters to takeadvantage of new technological developments (Gonzalez, 1988; Meissner,1988). The domestic aspect of recent growth is related to the subjectiveperception among capitalists and entrepreneurs that the favourable con?ditions prevailing under Pinochet will change very little after March 1990,which, oddly enough, coexists with the widely held view among the workingclass and the middle sectors that the economic situation under Aylwin willchange considerably in their favour. These two subjective perceptions do notneed to be incompatible (economic policy-making under Aylwin is unlikelyto be a zero-sum game), but the necessary conditions for making themcompatible were not present in early 1990, at the end of the Pinochet regime,and they have to be created, developed and maintained in the most carefulway.The purpose of this paper, which was completed in March 1990 just as theAylwin administration was coming into power, is to analyse the problemsfacing the new democratic administration and the degree of consensus orconflict which is likely to arise over the formation and implementation ofpolicy. Its basis is the enormous and impressive research output produced bythe major academic think-tanks in Chile during the 1980s, in particular theCentro de Estudios del Desarrollo (CED) and the Corporacion de Investiga?ciones Economicas para Latinoamerica (CIEPLAN), many of whose leadingfigures, despite their differences of approach, have been closely connectedfirst with the 'Campaign for the No1 in the 1988 plebiscite and then with the



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CHILE AFTER PINOCHET 27Aylwin campaign for the presidency. Their publications provide an excellentbase on which to assess the thinking of the new government as the Chileaneconomy enters the 1990s.THE DANGERS OF EXCESSIt is likely that some of the political and economic objectives of the Aylwinadministration are contradictory, or at least that they converge only under arestrictive set of conditions. At the time of writing, the optimistic scenario hasthe new government designing and implementing economic policies whichwill allow the economy to preserve the very high growth rates achievedimmediately before the election (over 9 per cent in 1989), and to maintainfinancial and external stability, as well as reducing the extent and seriousnessof poverty, improving income distribution, and restoring the rights of labour.This implies making a number of correct policy decisions and avoiding asmany of the likely pitfalls and temptations as possible. Trade-offs betweenobjectives will be necessary in order to respect the fundamental staticmacroeconomic equilibria, and particular attention will have to be paid tointertemporal dynamics.HEALTH, EDUCATION AND WELFARESome of the potential pitfalls and temptations can be illustrated if we look atpromises made by other candidates, and the impact of certain welfareprogrammes. The unwillingness of the incoming Aylwin administration toengage in irresponsible populist short-term measures was shown by itsrefusal to match some of the most extravagant promises of the presidentialcampaign of Francisco Javier ('Fra-Fra') Errazuriz, such as the commitmentto provide education and health care free of charge for everyone, and toeliminate the UF (unidad defomento 'unit of development'), the indexationsystem for mortgages on houses and other forms of long-term borrowing.Free education and health care for all are too expensive a burden on fiscalresources under the rather tricky conditions ofthe early 1990s. They wouldencourage certain forms of inefficiency, and in terms of wealth and incomeredistribution universal benefits are probably regressive, compared withgranting these services free of charge only to the poor.The present picture is complex because subsidies are granted in a multi-plicity of ways, but by the mid-1980s the top quintile (the richest 20 per cent)ofthe population was receiving 56 per cent ofthe national income (includingnon-subsidised pensions) against 3 per cent received by the bottom quintile(Rojas, 1988). As a result of the distribution of the so-called 'monetarysubsidies1, the share of the top quintile fell to 54 per cent, and the bottomquintile increased to 4.5 per cent. But 'monetary subsidies' include transfersas different as the POJH and PEM ('Programme of Jobs for HouseholdHeads', and 'Minimum Employment Programme'), on the one hand, ofwhich 73 and 72 per cent, respectively, go to the poorest 30 per cent of thepopulation, and the family allowance on the other hand, of which only 30 percent goes to the poorest 30 per cent ofthe population (Rosende, 1989). Thusthe picture presented by 'monetary subsidies' is a mixed one: in terms of



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28 BULLETIN OF LATIN AMERICAN RESEARCHincome redistribution POJH and PEM are progressive, but family allowanceis completely neutral. The overall balance is, however, a progressive one.

By contrast, if we move to education subsidies, in the aggregate theyreduce further the share of the top quintile, to 51 per cent, and increase thatof the bottom quintile, to 6.5 per cent. But these education subsidies includeitems as dissimilar as the school textbooks programme, 51 per cent of whichgoes to the poorest 30 per cent of the population (which makes it pro?gressive), against the state university contribution, of which only 10 per centgoes to the poorest 30 per cent of the population (and which is, therefore,extremely regressive). The university fiscal credit, a form of tax allowance,and the higher education programme are also clearly regressive: only 11 and18 per cent of them, respectively, go to the poorest 30 per cent of the popula?tion. Aggregate health subsidies again shift a further small share of nationalincome from the top to the bottom quintile. The statistics to show howindividual subsidies in health go to the poorest are not available, but thepicture probably is either quite similar to that offered by education, or evenmore regressive, since health subsidies include a wide range of transfers,from food distribution in local clinics to dental treatment, visits to specialists,laboratory exams, X-rays, and surgical operations. A substantial share ofthecost of many of these is met by out-of-pocket payments, which suggests thatthe well-off use them much more than the poor (Scarpaci, 1985,1987,1988;Viveros-Long, 1986).

Eliminating the UF indexation system as suggested by Errazuriz wouldreturn the housing market and the financing of the construction industry tothe chaotic conditions prevailing before 1960.2 The UF is a daily indexationscheme which over the years has remained closely correlated with theconsumer price index, and which ensures that the real value of long-termdebts incurred in connection with housing (not only by families, but also byhousing associations, intermediaries such as firms buying wholesale for theiremployees, construction firms, suppliers of inputs, and so on) is not erodedby high inflation, but maintained in such a way that the funds of publicagencies concerned with the housing problem do not become depleted in realterms. The so-called 'problem of the UF' arose because the market values ofhouses failed to increase in line with inflation during the 1982-1983 crisis,and immediately after, which meant that many people who bought newhouses during the 'miracle' years in the late-1970s now face excessivemortgage payments. Most observers agree that this problem is best dealt withby keeping the inflation rate low and supporting a steady rate of aggregateoutput growth (which should be reflected eventually in the housing market)(Carey, 1988).Rather than matching the Errazuriz promise of free education and healthcare for all, the Aylwin manifesto has committed the new government only to'spending more in health and education'. In practice the only concretepromises are to increase the provision of materials to state hospitals andclinics (a typical complaint in the presidential campaign was that of'hospitalswithout aspirins'), and to start some programmes of training for unemployedschool-leavers. From the point of view of redistribution of income andwealth, both these measures are progressive: state hospitals are used by the



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CHILE AFTER PINOCHET 29poor to a much larger extent than by the rich and the middle sectors, andunemployment among young people is a problem only or mainly for thoseunable to gain access to the universities or other institutions of highereducation. These two measures are also relatively inexpensive, but they areunlikely to make much difference to most of the population. In any case, acareful allocation of the government social expenditure budget should provemuch more effective than the overall expansion of it. During the 1980s, onlyabout 40 per cent ofthe so-called fiscal social expenditure was directed to thepoor (and less than 20 per cent of that devoted to higher education or certainspecific housing programmes) (Rosende, 1989). Improvement in this con?nection implies both identifying those in need with the utmost care, as well asfacing an inevitable trade-off between meeting their claims and those of othergroups in the population.THE DANGERS OF A PREMATURE KEYNESIAN EXPANSIONAn important objective of the new government will be to resist the tempta-tion of an early Keynesian expansion. Chilean conditions are much morefavourable than those at the beginning of the Alan Garcia administration inPeru (Hojman, 1989c), or Alfonsin's in Argentina or Sarney's in Brazil.Nevertheless, an early expansion of aggregate demand, coming on top of anexceptionally high growth rate in 1989, which itself followed very highgrowth rates in 1985-1988, may place considerable strain upon installedcapacity in manufacturing and upon the availability of other resources, aswell as sending all the wrong signals to the domestic and internationalfinancial markets (Arellano and Ramos, 1987; Corbo, 1987; Marfan, 1987).Important officials in the new Aylwin government frequently state that anearly Keynesian expansion is bound to provoke 'fast growth in the first year,economic problems in the second, and political problems in the third year'(which was precisely what happened under Allende in the early 1970s). Bycontrast, a carefully timed cycle of moderate rather than spectacularKeynesian expansion shortly before the 1993 elections might improve theCDP electoral chances quite substantially.3

The most helpful way of looking at this problem is in terms of a two-gapmodel, which assumes that barriers to growth may result either from in-sufficient domestic savings, or from insufficient external savings. This modelwas fashionable among development agencies and economists in the 1960s,but it went out of fashion in the following decade, when international financeafter the oil shocks was so widely available that thinking in terms of two gapsno longer made sense. If the domestic economy had been unable to generateenough savings, foreign loans were readily available on tap, and they couldalways be obtained to bridge this gap (this was sometimes known as 'debt-ledgrowth'). But since the external debt crisis foreign loans have dried up, andthe two-gap model may have become relevant again. In the Chilean case thereis a foreign constraint: the trade balance should be positive in order to servicethe external debt. There is no particular problem with this, since exports arevery healthy (this is a crucial difference compared with other Latin Americancountries), but it means that domestic savings are required, both to pay forinvestment and to service the debt. In technical jargon, despite the fact that



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CHILE AFTER PINOCHET 31tive study based on housing conditions suggests that 'extreme poverty', whichis defined differently from 'poverty', was about 15 per cent (Mujica andRojas, 1988), and a survey of several previous studies concluded that theextreme poverty rate in 1982 was 'highly unlikely to be lower than 12 percent' (Fuenzalida, 1987). A more realistic figure for the number of the poorin the late 1980s would be about 3-4 millions (which obviously is still verylarge).4One of the first measures announced by the new Aylwin government, evenbefore taking office, was a moderate increase in the tax rate, and theextension of tax liability to retained profits (since the 1984 tax reform, taxhad been payable on distributed profits only, not on retained ones). But howmuch income redistribution can be achieved by making the rich pay moretaxes? Possibly higher taxes should be restricted to the top 20 per cent of thepopulation (the top and the top-but-one deciles of the income distributionpyramid). This is not only because these are the only deciles which can bedescribed as wealthy, but also because the Aylwin government does not wishto alienate the support of the middle sectors, who traditionally haverepresented a large and politically powerful segment of the population, andhave played a central role in Chile's political and institutional developmentssince the 1920s (Boyle and Hojman, 1985). By the end of the 1980s theeffective income tax rate was about 10 per cent. Possibly this rate could bedoubled, up to 20 per cent, for the top and top-but-one deciles, but a higherlevel of taxes than this is likely to encourage massive tax fraud and capitalflight. By Latin American standards, and in contrast with the situation before1973, capital flight from Chile has been remarkably small under the Pinochetregime (Holuigue, 1979; Arellano and Ramos, 1987). It is usually assumedthat short-term international capital movements react sharply (in a negativefashion) to domestic credit expansion by the Central Bank, but Corbo (1987)estimated that such a response was very subdued in the Chilean case duringthe period 1975-1982. This is perhaps related to the presence of a highdegree of confidence by owners of short-term capital in the Pinochet regime'slong-term strategy, if not in its short-term policies, even during periods ofeconomic crisis. For those who might have taken wealth out of Chile,Pinochet was a solid guarantee against expropriation and confiscatory levelsof taxation. But as yet Aylwin has not been invested with the same con?fidence, which he is possibly unable?and unwilling?to inspire. Thus thedanger of substantial capital flight under Aylwin at the slightest signal ofthings going wrong is a serious possibility. Since the top 20 per cent of thepopulation were estimated to have received about 59 per cent of the nationalincome (excluding all pensions) in 1989, this means that the share of nationalincome to be redistributed by means of higher income taxes would amount toabout 6 per cent (10 per cent ofthe total income ofthe top 20 per cent ofthepopulation).Additional fiscal resources might be saved by eliminating the subsidies tothe forestry industry, which are deemed to be absurdly high and completelyunnecessary, but the fiscal revenue saved here is more likely to be kept inrelated areas, for example, by redirecting it towards small and medium firmsin the forestry sector, or towards peasants and other activities of the poor in



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32 BULLETIN OF LATIN AMERICAN RESEARCHthe forestry regions. The forestry industry has been under scrutiny for a longtime (Cruz and Rivera, 1983; Cavieres et al, 1986; McKetta et al., 1987;Leyton, 1988). This industry is highly concentrated and vertically integrated,and the generous subsidies granted to it have led to significant expansion ofoutput and exports, but also to extraordinary profits for the three dominantconglomerates ('grupos'), worsening local conditions for poor peasants, anddeterioration of the environment. Increased taxes and the small savings infiscal expenditure made by reducing unnecessary subsidies and by othermeans would represent a significant amount of resources, but hardly enoughto solve all the problems of 'five million poor', or even three millions.5Labour, unions and union rightsThe question of union rights has to be addressed, but its implications are notalways perfectly clear. One of the expressions most frequently used byeconomists associated with the Aylwin campaign is 'incorporar al mundo deltrabajo', which is best translated as 'encourage the participation of labour1(but stopping short of defining what this participation is likely to consist of).The Aylwin manifesto explicitly refers to the 'restoration of trade unionrights'. However, restoration of rights to the level of 1969 is qualitativelydifferent from restoration to 1971 or 1972 levels. Business interests arereasonably happy with the former (maybe this is also what economists in the'moderate' or 'right' wing of the CDP had in mind), whereas at least the mostmilitant trade unionists are after the latter. Among the first measuresannounced by the Aylwin government, shortly after the December 1989election, was permitting nationwide collective bargaining (collective bargain?ing had been restricted to plant level only by the 1979 Labour Law). Themaximum time limit permitted for strikes will be increased from 60 topossibly 180 days. National unions and the union leadership are expected toplay a central role in national life. Christian Democrat social scientists andpoliticians are convinced that most trade unionists are more interested inmodernisation than revolution. This has been so for decades, but develop?ments under the military dictatorship have reinforced this pattern (Camperoand Cortazar, 1985, 1988).6 Strong but responsible and democratic unionsare also expected to provide some counterbalance to the power of the grupos(business conglomerates).Full restoration of trade union rights (as opposed to extreme unionmilitancy) is unlikely to affect economic performance negatively. Many ofthemost competitive export activities are perfectly capable of meeting signifi-cantly higher wage bills. This is related to the fact that international compara?tive advantage in this case depends to a large extent on access to huge, andimmensely favourable, natural resources, rather than on paying low wages(this is as true for fruits as it is for minerals; Cruz and Leiva, 1982). TheIndustrialists1 Association, SOFOFA, as well as other business associations,have been arguing for years in favour of a higher minimum wage (this wasalso in the Aylwin manifesto). By contrast, more openly politically motivatedmilitancy or strikes might eventually have a negative effect on comparativeadvantage, by damaging the reliability of Chilean suppliers abroad, graduaUyincreasing labour costs, and discouraging new investment, and more



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CHILE AFTER PINOCHET 33generally by altering the whole political environment, or the subjectiveperception of it by some key economic actors. One example may be the threatof a strike in the copper sector in November 1989 against the plan of dividingthe holding company CODELCO into individual smaller firms (according tothe opponents of this measure, possibly with a view towards eventualprivatisation). The division of CODELCO was never carried out, asthreatened, but even if it had been, striking in order to prevent privatisationwould have constituted a case of overreaction, since state ownership of thenationalised copper mines is enshrined in the 1980 Constitution. Changingthis would have required a constitutional reform, and therefore a plebiscite,which obviously the Pinochet regime could not win.

MANAGING THE ECONOMYLow inflation and external stabilityBesides the problems of fulfilling the hopes of the poor, the Aylwinadministration also faces potentially serious difficulties in managing theeconomy overall. There is general agreement that monetary targets will haveto be used to keep inflation under control. That this is so reflects how muchof a red herring the old debate between traditional Latin American'monetarists' and traditional Latin American 'structuralists' has become inChile: regardless of their differences in other areas, all of them agree that anessential condition to stop inflation is the control of the money supply. Thelaw granting autonomy to the Central Bank passed at the end of 1989, andmuch fought against by the democratic opposition to the Pinochet regime,may in the final analysis become a blessing in disguise to the Aylwingovernment: an independent Central Bank, managed and staffed by'Chicago boys' (although an economist from the CDP and another from thePPD?Party for Democracy?sit on the five-man board, and the Chairmancomes from CEPAL, the United Nations Economic Commission for LatinAmerica) will help to prevent all forms of excessive government expendi?ture.7

The question of the preservation (or otherwise) of the low average, lowvariance tariff system, however, may well split the CDP. The arguments forand against protection of domestic manufacturing are well known, and thereis no need to rehearse them here (Corbo, 1985; Tironi, 1985). But some ofthe most articulate supporters of a system of differentiated tariffs, mostly onthe grounds that it should stimulate employment, come from members oftheCED (Centre for Development Studies), a think-tank of clear ChristianDemocrat leanings.8 This is the case for Ernesto Tironi and Eduardo Aninat.The latter is also chairman and managing director of the prestigious firm ofbusiness consultants, Aninat and Mendez. By contrast, CIEPLAN, under thedirection of Alejandro Foxley (who was appointed Minister of Finance in thefirst Aylwin cabinet), from where some of the best-known economic spokes-men of the democratic opposition were drawn during the 1980s, is in favourof maintaining the low average, low variance model practically untouched.One of the co-authors of the most serious empirical study of the employmentcreation effects of Chile's international trade, which concludes that export



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34 BULLETIN OF LATIN AMERICAN RESEARCHactivities are more labour intensive than import substituting ones, is amember of CIEPLAN, Patricio Meller (Corbo and Meller, 1981).9Other economists not linked to the CDP have also argued strongly againstdifferentiated tariffs. Hachette (1985) has shown that a proposal made bySOFOFA after the 1982-1983 crisis for a range of differentiated nominaltariffs between 0 and 35 per cent actually implied levels of effectiveprotection for some import substitution activities of the order of 110 percent, and negative protection (punishment in the form of hidden taxation) forexportables of about ?35 per cent. This study contributed significantly todiscrediting the industrialists' proposal, since its likely consequences in termsof inefficient resource allocation, a decline in non-traditional exports, ascarcity of foreign exchange, arbitrariness, and official corruption becamefully apparent. In terms of the actual policy measures of the Aylwin govern?ment, the Corbo-Meller-Hachette position may prevail, but it will remainunder constant attack from supporters of differentiated protection forcertain individual activities.10Savings, investment, foreign loans and capitalflightCommenting on economic performance during the 1970s and 1980s, somewell-known and respected economists (including some linked to the CDP)have argued that 'savings were insufficient' (of course, this comment may alsoapply to the 1950s and 1960s). This is a very general statement and beforeaccepting it as true, and as a fundamental motivation for policy, it needs to bequalified. It is often accepted that the incremental capital output ratio(ICOR) for the Chilean economy can be as high as 3 or even 4, meaning that a1 per cent increase in output requires an investment equal to 3-4 per cent ofoutput. However, this depends on certain assumptions: (a) that installedcapacity is being fully utilised (that is, it ignores the fact that some capacity inmanufacturing and in other activities remains idle for most of the time); (b)that the ICOR is constant, which means that there is no room for diminishingit by using capital and other resources more effectively; and (c) that theproduction function is rigid, namely that the possibilities of substituting otherresources such as labour for capital are very limited. Several studies havepointed out that these assumptions are unrealistic, and that historically thelevel of capacity utilisation in Chilean industry has tended to be very low. Ithas been suggested that some simple measures such as the adoption of bettermethods and new technologies, or removing the institutional and legalobstacles to second and third shifts in the labour market, can have asignificantly positive impact on output and employment, without the need toincrease savings and investment substantially (Instituto de Economia, 1963;Behrman, 1973; Ramos, 1975).Whatever the problems of the ICOR analysis, however,

in overstating theinsufficiency of savings in Chile, the discussion earlier in this paper suggeststhat the level of savings may be crucial to the management of the economy inthe 1990s. Seldom in the post-war Chilean political scene has there beensuch universal agreement across party barriers about such a crucial issue asthat of the level of savings, but there have been major difficulties in develop?ing adequate policy instruments to achieve an improvement, for example the



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CHILE AFTER PINOCHET 35failed chiribonos programme of the Frei administration in the 1960s(Cleaves, 1974). It has often been argued that Chilean firms and householdsdo not save enough, although this may have been related to the historicalcombination of high inflation, artificially low interest rates, and the absenceof saving instruments capable of preserving the real value of savings, togetherwith the unreliability of the financial market institutions and political un-certainty. There is no reason to assume that contemporary Chilean society isstructurally profligate, rather than low savings being simply a result of in?adequate policies.11A further development which suggests that the new government shouldespecially encourage domestic savings is that it may decide to eliminatecertain forms of debt-equity swaps, used by foreign investors and by return?ing Chilean capital in the 1980s to purchase existing local firms; debt-equityswaps in the future may be reserved only to stimulate new investment(Ffrench-Davis, 1987; Schinke, 1987; Fontaine, 1988; Livingstone, 1988).This possibility has been suggested by some CIEPLAN economists. Otherthings being equal, this will probably reduce the amount of foreign savingsbeing made available to the domestic economy. The same is true forpractically all forms of foreign direct investment: some sectors of the CDPand other parties or groups in the government coalition may demand a muchtougher treatment of it than was the case under Pinochet, or even thatcontemplated in the official Aylwin manifesto. Aylwin will also be underpressure to reverse some ofthe privatisations carried out during the 1980s, inparticular those of natural monopolies, such as electricity and telephones. Asnoted earlier, therefore, capital flight, which was practically insignificantduring the Pinochet years, may increase dramatically in the early 1990s as aresult of threats of expropriation, confiscatory taxes, economic failure, orsocial unrest.

On the external debt front, however, the situation is far from desperate.Some of the candidates to the Congress in the 1989 electoral campaigndeclared that Chile had the second largest per capita external debt in LatinAmerica, a claim accepted enthusiastically by many foreign journalists. OneBritish newspaper went so far as to report that the Chilean debt per capitawas the highest. These statements are seriously wrong. According to thelatest World Bank figures, the Chilean external debt per capita in 1988 wasthe sixth highest in Latin America, after Nicaragua, Argentina, Venezuela,Costa Rica, and Uruguay, in that order. The ability to repay it was by far thebest in Latin America, and reasonably good by the admittedly deplorablestandards of the region. The World Bank estimate of the debt service ratio(payments of interest and principal as a percentage of exports of goods andservices) for 1989 placed Chile eleventh in Latin America, after Nicaragua,Brazil, Mexico, Uruguay, Bolivia, Argentina, Venezuela, Ecuador,Honduras and Costa Rica, in that order (Prest, 1989). It is true that a numberof obligations will have to be renegotiated by 1991, but this is nothing new:debt renegotiations have been taking place annually as a matter of course inrecent years. There is no doubt that when new conditions of politicaldemocracy and stability are added to the already existing situation ofeconomic stability and dynamism, the goodwill of foreign creditors should be



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CHILE AFTER PINOCHET 37more. The problem now is the danger of overproduction, at least in someproducts. The only possible limits to output expansion are on the demandside, internally and externally. The former should be tackled by incomeredistribution, and the latter by developing new products and markets.With regard to particular subsectors and products, specific policies andmeasures have been designed for many of them. Greater resources ought tobe devoted to research on international markets for fruits, to promotion inthese markets, and to the adaptation of supplies accordingly (including thereconversion of productive facilities, especially by small- and medium-scaleproducers, with state support). As noted earlier, the forestry subsidy, if noteliminated, could at least be allocated more selectively. Possibly the onlyinstance of tax reduction in the agricultural sector is likely to benefit wineproduction, which has been historically overtaxed on the grounds both that itis a source of alcoholism and that it generated excessive profits. Everywhere,policy success is seen as dependent on close collaboration between thegovernment and organisations of producers?small- and medium-scaleproducers and co-operatives in particular. Producer organisations arementioned explicitly in connection with technical research, extension activi?ties, credit, marketing abroad, forward planning, importation of inputs,protection against monopsonistic purchasing by conglomerates, and others.Government intervention is deemed necessary only when the markets fail,and subsidies should be required only to protect the poor (or in a few othercases such as protection of the environment). The peasant sector is seen asthe key area for which the state should provide its greatest degree of support,both because it has the largest potential for increasing yields and output(since yields in commercial agriculture are often as high as the best in theworld), and because this is essential in order to achieve legitimacy for the newdemocratic government policies. The possibility of access to land ownershipfor landless labourers would be established along lines similar to thoseoffering subsidised housing to poor urban dwellers.In terms ofthe complexity ofthe policy formation process, and the numberof economic, social, political, and institutional aspects which must be takeninto account, it is illuminating to compare the preliminary version ofthe CEDstudy report (Cox, 1988), with the final one (in Cox and Chateauneuf, 1988).Cox explicitly acknowledges the presence of differences among members ofthe team. For example, he is less enthusiastic than some of his colleaguesabout the state assuming a direct role in the rural economy. In the finalversion of the report, a low average, low variance tariff system is explicitlyproposed (this is not in the preliminary version), but the forestry section,written by Jose Leyton, argues in favour of some discriminatory tariffs. Ruralunionisation is to be legalised and the payment of union dues (but not unionmembership) would become compulsory. Both the right to strike and thelimitations on it imposed by the perishable nature of agricultural outputwould be explicitly guaranteed. But a reference to the 'need actively toencourage unionisation' in the preliminary version was deleted from the finalreport, together with a number of references to other issues, problems andquestions: among them, the danger of rural social unrest; the internationalassessment of Chilean sugar production from sugarbeet; and the 'usurious1



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38 BULLETIN OF LATIN AMERICAN RESEARCHinterest rates charged by the commercial banks. The wording in the finalreport was much more careful on, for example, the presence or absence ofscale economies, the promise of more jobs, or the general need for pricebands. Geographical enclaves of dynamic activities, or rural shanty towndwellers, were introduced in the final report for the first time.Industrial policy (or rather the lack ofit?)The most important characteristic of the Aylwin government's industrialpolicy is that there is none. This is so not because of lack of technical com?petence, but because it has been decided, after much agonising, that inter?vention in favour of individual industrial subsectors or specificmanufacturing activities may do more harm than good. But this policy has notbeen accepted without opposition, even from some of the Aylwin govern?ment's own supporters. As mentioned earlier, Tironi (1985) suggested asystem of differentiated tariffs, mostly to encourage employment, and Leyton(1988) recommended differentiated tariffs to support those activities in theforestry sector which produce goods devoted to the satisfaction of basicneeds. Valenzuela (1988) also recommended protection, in his case, of thosebranches ofthe industrial sector which produce inputs for copper mining, themetallic and metal-mechanical equipment industry in particular, in order togenerate backward linkages so as to diminish the enclave nature typical ofmining activities. Vignolo (1986), in an introduction to four studies ofindividual branches of industry (food, chemicals, metal-mechanical, andtextiles), argued that manufacturing should enjoy preferential treatment inrelation to other activities, and the authors of all the individual case studies inthis volume suggested some good reasons to defend special state support forthe particular branches of industry they analysed.It has been argued that in the Chilean case some carefully monitored,moderate and temporary amount of protection might be advisable, becausespeciahsation according to comparative advantage may lead towardsemphasis on certain exports, for which demand in world markets has only asmall income elasticity; both the production and the uses of such exports areremote from the principal trends in international technological development(Munoz, 1989). This is to a large extent a modern, sophisticated version ofthe old Prebisch structuralist argument. But on the other hand both thetheory and the actual Chilean experience show that the granting of individualexceptions to the general rule eventually becomes discriminatory andarbitrary, the source of permanent privilege, corruption and inefficiency(Johnson, 1967; Ffrench-Davis, 1981; Hachette, 1987b). Preferentialprotection for import substitute industries punishes exports, because bychanging relative prices it encourages migration of resources away fromexportables and towards import substitution, and also because it makes theimported inputs used in the production of exportables more expensive(Corbo, 1985; Hachette, 1985). On top of that, activities linked to theproduction of exportables are more labour-intensive than import substitu?tion ones; that is, for each unit of output they create more employment(Corbo and Meller, 1981).In connection with the large conglomerates or grupos, it is accepted that



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CHILE AFTER PINOCHET 39they are a necessary condition for dynamism in modern capitalist economies(Sanfuentes, 1984). There are a number of scale economies from which themost dynamic private enterprises operating in different markets can benefitonly if they constitute themselves into conglomerates (an example is theestablishment of their own research departments to monitor macroeconomictrends and changes in the international economy). Therefore the question isnot how to get rid of the grupos, but how to improve the trade-off betweentheir social benefits and costs. Some of the measures recommended includestrict control of the banks and the remainder of the financial sector by theSuperintendency of Banks and other official agencies, and attempts atincreasing the freedom and competitiveness of all markets by encouragingstudies from university and independent research bodies, and disseminatingtheir results widely. Another measure might be to support the developmentof strong, democratic and responsible nationwide unions, in order to create anecessary counterbalance to conglomerate power.COULD ANYTHING POSSIBLY GO WRONG?The short answer is yes. While the external debt is unlikely to constitute aproblem, unless something goes terribly wrong with exports (a possibility towhich we return later in this section), left-wing militancy, excessive stateintervention, the clash between nationalism and foreign investment, andopposition to the Aylwin policies from members ofthe government coalition,or even from within his own party, together with the dependence of Chile'sexports on external markets are among the most serious dangers.Extreme left-wing militancy, especially if accompanied by illegal takeoversof factories and agricultural land, or assassination attempts on senior armyofficers, is likely to put the Aylwin government in the unenviable position ofhaving to engage in repression itself, or allowing the police and the army to doit. And the possibility of extreme left-wing militancy, with some grassrootssupport, is likely to increase as the honeymoon period between the workingclass and the urban and rural poor and the new government elapses (there areobvious doubts whether it can last for four years).Next, there is the danger of excessive state intervention. Despite a highdegree of economic literacy among most ministers and high ranking govern?ment officials (and for that matter in the population as a whole), somepoliticians and bureaucrats are only recent converts to market economics,while others have not converted at all. Many of them may easily fall prey totheir old statist reflexes. Simply stated, if there is a problem in relation togovernment intervention, it would be because there was too much of it, ratherthan too little. A worrying example has occurred early in 1990. It is widelysuspected that the system of surface collective transport in Santiago isorganised as a cartel (Ugarte and Vatter, 1987). The market economist'sanswer would be to increase competitiveness by eliminating barriers to entry,supporting new entrants, and controlling abuses by the large operators (forinstance, by fixing prices administratively at the lowest level which would becompatible with competition). But the Ministry of Transport has announcedthat its policy choice will be precisely the opposite: to restrict the number ofoperators on certain routes. Clearly, this does not need to establish a



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40 BULLETIN OF LATIN AMERICAN RESEARCHprecedent, but it sounds ominous. In any case, in relation to governmentintervention, the more searching question is perhaps not how much, butwhere, and of what kind. What is really important is quality rather thanquantity. A similar, but not identical, problem is that of excessive andmisguided nationalism in relation to foreign investment. It might happen thatthe policy drifts from being marginally more selective towards it (as, forexample, in the question of debt-equity swaps; Ffrench-Davis, 1987), tobeing hostile (as other members of the government coalition are). Bothstatism and nationalism may eventually be seen as serious threats bypotential domestic and foreign investors.13

Dependence on external markets is inevitable in open, export-basedeconomies. On the other hand, all the most successful experiences of growthand development in the contemporary world, from South Korea and Taiwanto West Germany and Japan, are export based, just as all attempts at autarkyhave led to economic, social and political stagnation. The real danger is notexports themselves, but excessive or exclusive concentration on a singleproduct and/or a single market. The Chilean economy is no stranger to thedifficulties connected with protectionism, or to export concentration (forexample, the nitrate experience during World War I). In the 1980s, totalexports as a share of national output have increased in relation to the 1960sand early 1970s, but the degree of concentration on individual exportcommodities and individual importing countries has declined. The share ofcopper in total exports has fallen from 80 to 50 per cent. Protectionism hasnot been a problem for exports to the United States of America, and it isunlikely to become a problem as long as there is a Republican president in theWhite House. Even a Democrat president would have problems in sacrificingthe living standards of American consumers in order to protect local highcost producers. The case of the European Community is different, and thereis a strong possibility that Chilean agricultural exports might face discrimina?tion due to pressure from producers of similar goods from southern Europe.

However, the situation requires careful consideration of individual sectorsand products. Chilean apples and table grapes already take large shares ofthemarkets of some ofthe main consumer countries, and the same is true of fish-meal and copper. But the possibilities for expansion are very large for manyother fruits (plums, peaches, kiwis, cherries, apricots, avocados, nuts, and soon), for labour-intensive greens and vegetables, for wine, some productsfrom the forestry sector (Gonzalez and Hurtado, 1984a,b; Ceron, 1987), andproducts of the fishing industry (such as different types of fresh, frozen andcanned fish and shellfish, or Pacific Ocean salmon; Staplefield, 1987).Successful marketing is constantly opening new outlets in many countries,from the Middle East and Far East to Latin America and the rest of the ThirdWorld. Even for those products for which further export expansion requiresa fail in price, the cost structures are usually such that this would still beperfectly compatible with respectable profit margins (Cruz and Leiva, 1982;Gonzalez, 1988; Meissner, 1988). The world prices of most fruits are notexposed to the same wild cyclical fluctuations suffered by the copper price.And in the case of copper, the proposed expansion of Chilean supplies to theworld market (defended, among many others, by Juan Eduardo Herrera, one



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CHILE AFTER PINOCHET 41of the members of the board of the Central Bank) explicitly assumes that thiswill involve a permanent decline in the long-term market price. However, inview of the large reserves and low costs of the Chilean operations, expansionstill makes sense. The negative impact on domestic activities of short-termcopper price instability is already taken care of by the Copper StabilisationFund.

In terms of economic policy choices, some ofthe most determined opposi?tion to the Aylwin government will come from his own party, or from othermembers of the government coalition, even early in the life ofthe administra?tion. We have already seen that there are differences over the optimal tariffregime and industrial protection level (which are also linked to differentattitudes towards the Andean Group), over the size and nature of state inter?vention, and over the role to be permitted to foreign investment. There arealso opponents of the view that copper supplies should be expanded (Tomic,1986), and there may be differences over some of the effects of particularexchange rate regimes (Ffrench-Davis, 1981; Meller and Solimano, 1987).Some members of the government coalition are even prepared to argue (inprivate) that there should be another edition of the agrarian reform. Shouldthe expectations of many voters be disappointed, political support for theCDP is likely to decline at a gradual pace, mostly in favour of parties andgroups to the left, although some who were CDP supporters in 1989,especially among the middle sectors, may migrate towards the centre-rightand right. This would make the pressure for policy changes almost un-bearable, and the well thought-out policies of the incoming administrationmight be replaced by something less than perfectly coherent. In this connec?tion, the congressional strength of the centre-right and right-wing parties,especially Renovacion Nacional (National Renewal), the presence ofsenators nominated by Pinochet, the role of the military in the SecurityCouncil, and the autonomy of the Central Bank may all become, at least insome respects, quite convenient for the Aylwin government. They might dothe government's dirty work by being tough, and giving the government agood excuse to be tough, against excessive demands from workers orcompanies, or unreasonable demands from politicians in the ranks of thecoalition.14CONCLUSIONSPossibly the most significant conclusion to emerge from this discussion is thatAylwin's economic policies represent a fundamental continuity between the1980s and the 1990s.15 This continuity results not only or mainly from thefear of antagonising the military, but also because the package of free-marketpolicies implemented in the late 1980s was successful (as predicted by manyeconomists of different political persuasions), and most of the leadingChristian Democrat economists and many of their colleagues to the rightshare a large number of views, assumptions, analyses and conclusions for thefuture. Despite appearances to the contrary, this is not a recent development.For instance, the view that control of the money supply was a necessary (ifperhaps not sufficient) condition for controlling inflation was alreadygenerally accepted by the late 1960s. The same is true of exchange rate



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42 BULLETIN OF LATIN AMERICAN RESEARCHpolicy: that a crawling peg is better than a fixed nominal exchange rate inChilean conditions was already evident in the 1960s, and the disastrousfailure of the fixed exchange rate experiences of 1971-1973 and 1979-1982have only confirmed this. There are many other examples, dealing with theelasticities of supply and demand of exports and imports, with the size ofparameters in the labour market schedules, and so on. On other issues agree?ment has been reached more recently, in the 1970s or 1980s, for examplewith regard to post land reform agricultural conditions, the internationalcopper market, regulation of the financial markets, relief measures againstextreme poverty, or returns to investment in human capital.In this connection the use of the label 'Chicago boy', which constituted apropaganda victory for the opposition in the early years ofthe dictatorship, isnow more misleading than anything else, and certainly more misleading thanbefore. There were always some problems with this label, such as the fact thatthe link between the Catholic University and Chicago did not embrace someof the most representative officials of the Pinochet regime and supporters offree-market policies (Hernan Biichi, Jose Pinera), just as many CatholicUniversity-Chicago graduates became some of its most conspicuousopponents (Ricardo Ffrench-Davis). The philosophical, theoretical andideological frontiers between Christian Democrat and neo-liberal thoughtbecame blurred as many economists, other social scientists, and politiciansmoved more or less effortlessly between positions in the Frei and Pinochetgovernments, international organisations, and academia.16 Some of thecentral principles of free-market economic policy-making will not disappearwith the Pinochet regime. On the contrary, they will remain playing aninfluential role far beyond the limits of the 'Chicago' circle. Observers mightbe forgiven for speculating that, despite superficial appearances to thecontrary, over the very long term there is a high degree of continuity ineconomic policy between the Frei, Pinochet and Aylwin governments, fromthe 1960s to the 1990s, leaving the Allende administration as the odd oneout. Morever, this continuity can be successful. Or, in other words, there maywell be only one model of successful capitalist development for Chile, that ofthe mainstream Christian Democrat right, which would be essentially thesame as that ofthe more lucid supporters ofthe Pinochet regime. Among thepossible difficulties facing the Aylwin government, the unavoidabledependence on external markets typical of export economies, and thequestion of the external debt are unlikely to become problems as serious asthe dangers of extreme left-wing militancy, excessive statism, misguidednationalism, and growing dissent about economic policies in the governmentcoalition's own ranks, especially if these policies fail to gain popular andelectoral support rapidly.Acknowledgements?The author gratefully acknowledges the helpful comments of the editorsand referees of the Bulletin. The Nuffield Foundation provided financial support for researchvisits to Chile in 1988 and 1989, during which much of the material used in this article wasobtained.



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NOTES1. Other political objectives are the democratisation of local government, the replacement ofPinochet as commander-in-chief of the army, a post to which he is constitutionally entitledfor eight years, and trialsfor those guilty of human rights abuses.2. These conditions are described by Mamalakis (1976), and the first attempts at providingsome stability through indexation and other measures in the early 1960s and more recentlyare discussed by Cleaves (1974) and Sandilands (1980). Interestingly,one of these efforts atobtaining private sector financing for low-income housing purposes included a scheme tolaunder returning capital flight.3. The only possible 'expansion' in the short term would not be a Keynesian process ofaggregatedemand expansion, but rather a strategycarefully designed and implemented, inorder to avoid making inflation worse and damage to the trade balance by increasingimports, of shifting expenditure rather than increasing it. It would be financed largely oreven completely by more taxes;it would aim at using idle or underutilised installed capacity;and expenditure would be addressed to non-tradeables and labour-intensive sectors(Marfan, 1987). Some public work programmes, popular housing, and some education andhealth schemes may fall within these categories. Fiscal expansion might also be allowed inorder to offset the possibly contractionary effect of a devaluation (Meller and Solimano,1987).4. The results of more recent surveys,with datafor the second halfof the 1980s, some of whichconfirm the high estimates presented by Torche, but without overcoming the criticismsraised by Ihnen, are examined in Tironi (1989).5. Tironi (1989) has presented what is possibly the most complete and articulateprogrammefor reducing (not eliminating) poverty in Chile. This is a two-year programme whichinvolves creating 200,000 new jobs (in addition to those expected from ordinary economic

expansion), and increasing the average monthly income of the bottom 40 per cent of theworking population by 10,000 pesos (about US $35). The annual cost of this programmewas estimated, possibly conservatively, as US $830 million?4 per cent of domestic output,or 25 per cent of tax revenues.6. Rene Cortazar became Minister of Labour in the first Aylwin cabinet.7. The democratic opposition appointed the Christian Democrat economist Roberto Zahler,who has had a distinguished career (and holds a Ph.D. from Chicago), and the PPD's JuanEduardo Herrera, a respected international expert on the copper industry,who is in favourof expanding Chilean supplies to the world market (at the cost of lower prices; O'Brien,1986).8. The director of CED was Edgardo Boeninger, now a member of the first Aylwin cabinet asSecretary General to the Presidency. Some of his views are presented in Boeninger (1986).9. It would be misleading to present CIEPLAN (or for that matter CED) as monolithic.CIEPLAN in particularis a first-class academic institution of internationalstanding,and assuch, its members have their own specialisations, and there may be different opinions onmatters of common interest. For a representative sample of the views held by CIEPLANmembers, see the references to Arellano, Cortazar, Ffrench-Davis, (Alejandro) Foxley,Marfan,Meller and Munoz.10. The highly enlightened policies of support to non-traditional exports in force duringthe late1980s are reflected in, among other areas, the attitude towards adoption and diffusion ofnew technologies with international market possibilities, carried out by Fundacion Chile.This approach is enthusiastically shared by CIEPLAN. Amazingly, some of these tech?nologies, such as those used in the cultivation of Pacific Ocean salmon, are freely availableabroad (Gonzalez, 1988; Meissner, 1988). The pragmaticsearch for, and incorporation of,

these freely available foreign technologies contrasts sharplywith the situation in other LatinAmerican countries. InArgentina, for example, a recent bestseller by thejournalist RodolfoTerragno, a former minister in the Alfonsin government, makes national success in the nextcentury dependent on the development of technological research by local universities, aposition rejected by Fundacion Chile as unrealistic, hopelessly expensive and technicallyimpossible (Terragno, 1988).11. In empirical studies, the most significant determinant of domestic savings is income,followed by uncertainty and price instability. The interest rate and tax incentives do not



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44 BULLETIN OF LATIN AMERICAN RESEARCHseem to be highly relevant, and foreign and domestic savings appear to be negativelycorrelated,althoughthe reason for this is not perfectlyclear (Foxley, 1986; Hojman, 1986).Itis interestingto note thatSergio Molina, the Minister of Finance in the Frei administrationresponsible for the chiribonos programme, is the Minister of Planning in the incomingadministration.12. For some relatively recent estimates of price and other elasticities of agriculturalproduc-tion, see Mujicaand Oncken (1984), Quiroz et ai (1988) and Hojman(1990).13. This would be most unfortunate,since the internationalstandingof the Chileaneconomy inearly 1990 was so good that investmentopportunities therewere being recommended evenby the Britishpress (such as the Independenton Sunday).14. In relation to the economic policies they support, it is fascinatingto observe how much theChilean political right has changed in a generation. During the 1950s and 1960s theyfavouredheavy governmentinterventionto protect manufacturing ndustry.Today theyaremainly concerned with the preservationof the free-market model. Even the extreme right-wing partyUDI is 'Chicago'or 'neo-liberal' ratherthan supportiveof selective governmentintervention in favour of the privileges of individualgroups of businessmen (Lavin, 1988).Some economic views of the centre-rightand right(but not UDI) are presented in Larrain(1987).15. This is so much so that immediately before the 1989 election, after all the reliable pollsindicated thatAylwin should win by an absolute majority,which excluded the possibility ofa second round, and of popular and civil unrest, the stock market rose and the parallel(unofficialfree market)dollar quotation fell.16. The list of names here is so long that it would be unfairand misleadingto single out only afew of them.

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CHILE AFTER PINOCHET 45CORBO, V. and MELLER, P. (1981), 'Alternative trade strategies and employment implica-tions: the Chilean case', in Krueger,A. O. et al. (eds), Tradeand Employment in DevelopingCountries. Vol. I., University of Chicago Press (Chicago).COX, M. (1988), 'Bases de un programa para el desarrollo sostenido y equitativo del agrochileno', paper presented to the GIA-CLACSO International Conference on LatinAmerican Agriculture, Punta de Tralca, 1 4 September.COX, M. and CHATEAUNEUF, R. (eds), (1988), Potencial y politicas para el desarrolloagricola en Chile, CED (Santiago).CRUZ, M. E. and LEIVA, C. (1982), 'La fruticultura en Chile despues de 1973: un areaprivilegiada de expansion del capital', Tomo 2, GIA, Resultados de Investigacion No. 3,Academia de Humanismo Cristiano (Santiago).CRUZ, M. E. and RIVERA, R. (1983), 'La realidad forestal chilena', GIA, Serie Resultados deInvestigacion No. 15, Academia de Humanismo Cristiano (Santiago).EDWARDS, E. (ed.), (1987), Dinamismoy equidad: cohabitacion forzosa, CED (Santiago).FFRENCH-DAVIS, R. (1981), 'Exchange rate policies in Chile: the experience with the

crawling peg', in Williamson, J. (ed.), Exchange Rate Rules, St Martin's Press (NewYork).FFRENCH-DAVIS, R. (1987), 'Conversion de pagaresde la deuda externa en Chile', ColeccionEstudios CIEPLAN 22: December.FONTAINE, J. A. (1988), 'Los mecanismos de conversion de deuda en Chile', EstudiosPublicos 30: Autumn.FOXLEY, A. (1987), Chiley sufuturo: un pais posible, CIEPLAN (Santiago).FOXLEY, J. (1986), 'Determinantes economicos del ahorro nacional: Chile 1963-1983',Cuadernos de Economia 23:68 (April).FUENZALIDA, L. A. (1987), 'Ocupacion, desigualdades y pobreza: aspectos cronicos ypolitica economica de largo plazo', Estudios Publicos 28: Spring.GONZALEZ, C. (1988), 'El contundente aporte de la tecnologia:entrevista a Joaquin Cordua',Revista de CIEPLAN 14: November.GONZALEZ, G. and HURTADO, H. (1984a), 'Perspectivas de las exportaciones de frutasfrescas para Chile', DEA, PUC (Santiago).GONZALEZ, G. and HURTADO, H. (1984b), 'Perspectives del mercado internacional deproductos forestales', DEA, PUC (Santiago).GUTIERREZ, M. A. (1987), 'Ahorro interno y crecimiento economico: un enfoque de cuentasnacionales', Cuadernos de Economia 24: 73 (December).HACHETTE, D. (1985), 'Apuntes para una discusion sobre politica arancelaria', EstudiosPublicos 17: Summer.HACHETTE, D. (1987a), 'El ahorro y la inversidn en Chile:un grandesafio', in Larrain,F. (ed.),Desarrollo economico en democracia, Catholic University, Santiago.HACHETTE, D. (1987b), 'Necesita Chile una estrategia sectorial?', in Larrain,F. (ed.), Desar?rollo economico en democracia, Catholic University, Santiago.HOJMAN, D. E. (1986), 'The external debt contribution to output, employment, productivityand consumption: a model and an application to Chile', Economic Modelling 3:1 (January).HOJMAN, D. E. (1989a), 'Prospects for rural employment and wages under neo-liberalpolicies: the case of Chilean agriculture',Bulletin of Latin American Research 8: 1.HOJMAN, D. E. (1989b), 'Yes or No to Pinochet: political television advertising in the 1988Chilean plebiscite', (typescript).HOJMAN, D. E. (1989c), 'Fundamental equilibrium exchange rates under contractionarydevaluation: a Peruvian model', Journal of Economic Studies 16: 3.HOJMAN, D. E. (1989d), 'Neoliberal economic policies and infant and child mortality:simulation analysis of a Chilean paradox', WorldDevelopment 17: 1 (January).HOJMAN, D. E. (ed.), (1990), Neo-liberal Agriculture in Rural Chile, Macmillan (London).HOLUIGUE, A. (1979), 'Movimientos internacionales de capital:analisis teorico y aplicacional caso chileno en el periodo 1959-1975', Instituto de Economia PUC, Documento deTrabajo 62.IHNEN, P. (1988), 'Reflexiones sobre la magnitud de la pobreza en Chile', Estudios Publicos30: Autumn.INSTITUTO DE ECONOMIA, (1963), Utilizacion de la capacidad instalada en 42 empresasindustriales, Universidad de Chile (Santiago).



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Chile After Pinochet Aylwin's Christian Democrat Economic Policies for the 1990s

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