Chile: The Political Economy of Development and Democracy in the 1990s

256 Pages·1993·13.257 MB·English

by  David E. Hojman (auth.)

CHILE
Also by David E. Hojman
* CHANGE IN THE CHILEAN COUNTRYSIDE: From Pinochet to Aylwin
and Beyond
CHILE AFTER 1973: Elements for the Analysis of Military Rule
DESARROLLO REGIONAL Y PLANIFICACION REGIONAL
ECONOMIC MODELS OF LATIN AMERICA
* NEO-LIBERAL AGRICULTURE IN RURAL CHILE
* Also published by Palgrave Macmillan
Chile
The Political Economy of Development
and Democracy in the 1990s
David E. Hojman
Lecturer in Economics and Latin American Studies
Liverpool University
M
MACMILLAN
©David E. Hojman 1993
Softcover reprint of the hardcover 1st edition 1993 978-0-333-55051-9
All rights reserved. No reproduction, copy or transmission of
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Any person who does any unauthorised act in relation to this
publication may be liable to criminal prosecution and civil
claims for damages.
First published 1993 by
THE MACMILLAN PRESS LTD
Houndmills, Basingstoke, Hampshire RG21 2XS
and London
Companies and representatives
throughout the world
ISBN 978-1-349-39015-1 ISBN 978-0-230-37665-6 (eBook)
DOI 10.1057/9780230376656
A catalogue record for this book is available
from the British Library.
This book is dedicated to my sons,
Felipe and Andrew
and
to the memory of my daughter, Fiona
Contents
List of Tables viii
Preface ix
List of Abbreviations xi
Introduction
History, Economics and the Policy-makers 5
2 Education 31
3 Health, Nutrition and Infant Mortality 49
4 The Labour Market 74
5 Women 89
6 The Middle Sectors
With Catherine M. Boyle 99
7 Poverty and Access to Housing 115
8 Markets, Market Failure and the State 128
9 Copper 143
10 Inflation and the Trade Balance 157
11 Savings, Investment, Growth and the Debt 177
12 Conclusions and Perspectives 189
Notes 204
References 217
Index 234
vii
List of Tables
1.1 The largest Latin American economies in the 1980s:
domestic indicators 13
1.2 The largest Latin American economies in the 1980s:
external sector indicators 14
1.3 Output in manufacturing, tradables, non-tradables and total 16
1.4 Savings, investment, the interest rate, inflation and the debt 17
1.5 The trade balance and the price of copper 17
1.6 Capital movements and the real exchange rate 18
1.7 The unemployment rate, employment and real earnings 19
2.1 Age and education of the unemployed in 1981 33
2.2 Expansion of private sector education, according to type,
between 1981 and 1986 38
3.1 Concentration in open ISAPREs: membership and profits
per member 55
3.2 Population, birth rate, and infant and child mortality rates,
time series 58
3.3 Infant mortality rates, per region, selected years 60
6.1 Social fiscal expenditure 100
6.2 Membership of old social security institutions, 1968 to 1981 101
6.3 Total labour force and total unemployed in Greater Santiago,
employers, self-employed and unpaid family workers
among them, 1966 to 1980 102
6.4 Earnings of different categories of workers, October 1968
to February 1990 104
6.5 Earnings in different economic activities, October 1968 to
February 1990 106
6.6 Housing, started by the public sector in the whole country,
and authorised for the private sector in 80 districts,
1968 to 1986 108
6.7 Distribution of agricultural properties by size, 1965 to 1986 109
6.8 Share of the middle sectors in consumer imports by
industrial groups, 1978, and group share in total industrial
output, 1968 to 1986 110
6.9 Share of industrial groups in total industrial output,
according to the middle sectors' consumption share in
the group, 1968 to 1986 110
viii
Preface
According to a recent publicity campaign for a brand of French cognac,
success in this activity depends on judiciously blending the old and the
new. It seems to me that exactly the same recipe applies to the success of
nations. We certainly can talk about Chilean economic success, at least
in comparison with other Latin American countries, in the late 1980s and
early 1990s. This Chilean success has been the result of the combina
tion, not always deliberate, of historical trends going back a long time,
maybe even centuries, with the application of some recent theoretical
and policy discoveries or rediscoveries, carefully selected for their suit
ability to the specific case of Chile. The purpose of this book is to exam
ine this blending, and to explore the perspectives for it during the 1990s.
I really do not know when I started writing this book. If someone
ought to be blamed for it, I would point the finger to Shanti Chakravarty,
who explicitly suggested that I should do it, sometime in late 1989. But
some of the ideas I develop here go back a long way. Possibly I started
thinking about them as an economics student in Santiago in the late
1960s and early 1970s, or even before. Working in Edinburgh towards my
PhD in the late 1970s was an enriching experience, largely thanks to
my supervisor Peter Vandome, which clearly contributed to many of the
views I hold now. Two years as a research officer in Bangor, and then
teaching at the Economics Department and the Institute of Latin Amer
ican Studies at Liverpool University offered new intellectual challenges,
and the possibility of addressing old ones.
Acknowledgements are due to many people, for a number of differ
ent reasons. Some had faith in me or in my work and offered generous
support and encouragement, others listened patiently long before what I
was saying became reasonably coherent, some read and commented on
parts of the book, or on papers which would eventually contribute towards
it, at different stages of its inception, others provided advice and chal
lenging notions over long periods of time, or gave me the opportunity of
presenting some of these ideas in several seminars and discussion groups,
or sharply disagreed in a coherent and articulate way. Many did most
of these things. The list should include Alan Angell, Gaby Baur, Bill Bell,
Catherine Boyle, Sarah Bradshaw, Christine Brown, Shanti Chakravarty,
Adam Cordery, John Fisher, Bob Gwynne, Jorge Hojman, Luis Kaffman,
Cristobal Kay, Rory Miller, Patrick Minford, Jose Montesino, Richard
IX
X Preface
Morris, Mark Ramsden, Sally Ruane, Chris Scott, Peter Vandome, Alicia
Whelan and Bob Wynn. Catherine Boyle also kindly agreed to publica
tion of our jointly-written paper on the middle sectors as Chapter 6 in
this volume. I should also record here my gratitude to Harold Blakemore,
whose premature death at the peak of his intellectual powers makes this a
sad duty. Harold's academic work, love for Chile, generosity and im
mense moral courage made him a permanent source of inspiration.
Academics and fellow students in Santiago, many of my own students,
my brothers and sister, and my colleagues at the University of Liverpool
helped me to sharpen many of the concepts discussed here. Very special
thanks should go to my parents, for their faith and support during so
many years, and to Christine, for everything. The Nuffield Foundation
and the University of Liverpool provided financial support for several
visits to Chile. None of these people (or institutions) should be held re
sponsible for the final result: as a matter of fact, I fear that some of
them may run for miles at the prospect.