Abstract

FFRENCH-DAVIS, Ricardo. Today's Challenges of the Chilean Economy. Inv. Econ [online]. 2008, vol.67, n.263, pp.67-105. ISSN 0185-1667.

Chile's economic reform has not followed a "unique model". Since the coup d'etat of 1973, there have been at least three different sets of reforms, each with different emphasis, doses and divergent results. Chile has experienced strong crises and economic instability and very different economic growth rates in the last three decades. Thus, the results to be shown depend on the period under scrutiny. There is neither a unique model nor unique results. While growing at a fast pace of 5.5% on average during 1990-2007, Chile has somewhat bridged the gap vis-à-vis developed countries in terms of Gross Domestic Product (GDP) per capita. However, the economic gap is still large and the social gap is even greater. An equitable growth strategy including substantial macroeconomic and microeconomic policy reforms is needed. As for the macroeconomy, a transition from the neo-liberal two-pillars approach (low inflation and fiscal discipline) to a three-pillars framework including, apart from those two pillars, regulation of both aggregate demand and key macro-prices such as the exchange rate is a must. Finally, microeconomic reforms must complete long-term capital markets (in particular for the PyMES), labor and enterprise training markets and technological innovation. Neo-liberal reforms in these areas either failed or were extremely weak.

Keywords : economic instability; growth; Gross Domestic Product; macroeconomic and microeconomic policy.

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