An overall model of development in Chile

This chapter presents an overall model of economic and social development in Chile. As with Taiwan, we start with a stage-setting period for the economic miracle of major market-opening reforms. This period is very different than the Taiwan case in two important respects. First, Chile set the stage with a much broader import substitution that included both light and heavy industry. Second, the period of import substitution in Chile lasted for four decades (the 1930s through the 1960s) and, unlike Taiwan, was shaped by previous economic structures in the country. The next stage from the mid-1970s to the mid-1980s was based on Chile’s integration into the global economy, similarly to Taiwan’s a decade earlier. Again, though, there was a fundamental difference from Taiwan in the Pinochet regime’s explicit intention to create a neoliberal economic system. The third stage, from the mid-1980s to the present, parallels Taiwan’s experience in that it encompassed a democratic transition and significant signs of economic maturity, although the linkage between economic and social development was very different in Chile than in Taiwan.