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Chile is an original member of the IMF, joining the organization on December 31, 1945. [1] The IMF would have a strong influence over the economy of Chile through the post-World War Two era of the 20th century, especially during the dictatorship of Augusto Pinochet.
In 1973 the democratically elected government of marxist Salvador Allende was overthrown in a coup launched by the military of Chile. General Augusto Pinochet became leader of the nation and he set the nation on a path of laissez-faire economics, hoping to gain favor with the United States. Pinochet gave control of the economy to a group of economist who became known as the "Chicago Boys" due to many of them having been trained in economics at the University of Chicago. In the immediate wake of the coup inflation had reached a record annual rate of over 500%, [2] and amongst the first goals of the Chicago Boys was to bring this under control. The overthrow of Allende was seen as a positive development by the major world financial institutions, and the IMF quickly began talks with the new government. IMF gave increasingly large loans to the junta, providing 79 million dollars in loans in both 1975 and 76. [3] Inflation would decrease through the 70s, and the government budget was cut as the public sector was increasingly cut.
By the early 1980s Chile's economic experiment took a turnt for the worst. Inflation began to increase again and the amount of the population in poverty increased drastically, reaching over 40% of the population [4] The shock economics of the Chicago Boys lost favor with the dictatorship, and one by one they were forced out and replaced by more moderate economists. These economists were not given the same amount of freedom to experiment, and so the influence of the IMF over the economy greatly increased. Even more free market reforms were passed, and the size of IMF loans was drastically increased. In 1985 alone over 800 million dollars was loaned out to Chile.
Since the return to democracy Chile has taken loans from the IMF twice, in 1983 [5] and in 2020. [6]
Within the IMF Chile currently contributes over 1,700,000 SDRs, giving it a vote share of 18,908. [7]
Milton Friedman was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy. With George Stigler, Friedman was among the intellectual leaders of the Chicago school of economics, a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago that rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations. Several students, young professors and academics who were recruited or mentored by Friedman at Chicago went on to become leading economists, including Gary Becker, Robert Fogel, Thomas Sowell and Robert Lucas Jr.
Marcos Orlando Letelier del Solar was a Chilean economist, politician and diplomat during the presidency of Salvador Allende. A refugee from the military dictatorship of General Augusto Pinochet, Letelier accepted several academic positions in Washington, D.C. following his exile from Chile. In 1976, agents of Dirección de Inteligencia Nacional (DINA), the Pinochet regime's secret police, assassinated Letelier in Washington via the use of a car bomb. These agents had been working in collaboration with members of the Coordination of United Revolutionary Organizations, an anti-Castro militant group.
The Chicago Boys were a group of Chilean economists prominent around the 1970s and 1980s, the majority of whom were educated at the Department of Economics of the University of Chicago under Milton Friedman and Arnold Harberger, or at its affiliate in the economics department at the Pontifical Catholic University of Chile. After they finished their studies and returned to Latin America, they adopted positions in numerous South American governments including, prominently, the military dictatorship of Chile (1973–1990), as economic advisors. Many of them reached the highest positions within those governments. While The Heritage Foundation credits them with transforming Chile into Latin America's best performing economy and one of the world's most business-friendly jurisdictions, critics point to drastic increases in unemployment that can be attributed to counter-inflation policies implemented on their advice. Ronald Reagan and Margaret Thatcher were influenced by Chile's policies and economic reforms.
Neoliberalism, also neo-liberalism, is a term used to signify the late-20th century political reappearance of 19th-century ideas associated with free-market capitalism after it fell into decline following the Second World War. A prominent factor in the rise of conservative and right-libertarian organizations, political parties, and think tanks, and predominantly advocated by them, it is generally associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, monetarism, austerity, and reductions in government spending in order to increase the role of the private sector in the economy and society. The neoliberal project is also focused on designing institutions and has a political dimension. The defining features of neoliberalism in both thought and practice have been the subject of substantial scholarly debate.
The "Miracle of Chile" was a term used by economist Milton Friedman to describe the reorientation of the Chilean economy in the 1980s and the effects of the economic policies applied by a large group of Chilean economists who collectively came to be known as the Chicago Boys, having studied at the University of Chicago where Friedman taught. He said the "Chilean economy did very well, but more importantly, in the end the central government, the military junta, was replaced by a democratic society. So the really important thing about the Chilean business is that free markets did work their way in bringing about a free society." The junta to which Friedman refers was a military government that came to power in a 1973 coup d'état, which came to an end in 1990 after a democratic 1988 plebiscite removed Augusto Pinochet from the presidency.
United States intervention in Chilean politics started during the War of Chilean Independence (1812–1826). The influence of United States in both the economic and the political arenas of Chile has since gradually increased over the last two centuries, and continues to be significant.
Patricio Aylwin Azócar was a Chilean politician from the Christian Democratic Party, lawyer, author, professor and former senator. He was the 30th president of Chile and the first president to be elected after the absolute rule of dictator Augusto Pinochet, and his election marked the Chilean transition to democracy in 1990.
The 1973 Chilean coup d'état was a military overthrow of the Popular Unity government in Chile led by the democratic socialist Salvador Allende as president of Chile. Allende, who has been described as the first Marxist to be democratically elected president in a Latin American liberal democracy, faced significant social unrest, political tension with the opposition-controlled National Congress of Chile, and economic warfare ordered by United States president Richard Nixon. On 11 September 1973, a group of military officers, led by General Augusto Pinochet, seized power in a coup, ending civilian rule. In 2000, the CIA admitted its role in the 1970 kidnapping of René Schneider, who had refused to use the army to stop Allende's inauguration. 2023 declassified documents showed that Nixon, Henry Kissinger, and the United States government, which had branded Allende as a dangerous communist, were aware of the coup and its plans to overthrow Allende's democratically-elected government.
An authoritarian military dictatorship ruled Chile for seventeen years, between 11 September 1973 and 11 March 1990. The dictatorship was established after the democratically elected socialist government of Salvador Allende was overthrown in a coup d'état backed by the United States on 11 September 1973. During this time, the country was ruled by a military junta headed by General Augusto Pinochet. The military used the breakdown of democracy and the economic crisis that took place during Allende's presidency to justify its seizure of power. The dictatorship presented its mission as a "national reconstruction". The coup was the result of multiple forces, including pressure from conservative groups, certain political parties, union strikes and other domestic unrest, as well as international factors.
Salvador Allende was the president of Chile from 1970 until his suicide in 1973, and head of the Popular Unity government; he was a Socialist and Marxist elected to the national presidency of a liberal democracy in Latin America. In August 1973 the Chilean Senate declared the Allende administration to be "unlawful," Allende's presidency was ended by a military coup before the end of his term. During Allende's three years, Chile gradually transitioned into a socialist state.
Air General Gustavo Leigh Guzmán was a Chilean general, who represented the Air Force in the 1973 Chilean coup d'état and, for a time, in the ruling junta that followed. Leigh was forced out of the military government in 1978.
The Latin American debt crisis was a financial crisis that originated in the early 1980s, often known as La Década Perdida, when Latin American countries reached a point where their foreign debt exceeded their earning power, and they could not repay it.
The economy of Chile has shifted substantially over time from the heterogeneous economies of the diverse indigenous peoples to an early husbandry-oriented economy and finally to one of raw material export and a large service sector. Chile's recent economic history has been the focus of an extensive debate from which neoliberalism acquired its modern meaning.
The Government Junta of Chile was the military junta established to rule Chile during the military dictatorship that followed the overthrow of President Salvador Allende in the 1973 Chilean coup d'état. The Government Junta was the executive and legislative branch of government until December 17, 1974, when Augusto Pinochet rose was formally declared President of Chile in late 1974. After that date, it functioned strictly as a legislative body until the return to democracy in 1990.
Michael Kast Rist, commonly known as Miguel Kast, was a Chilean economist of the Chicago Boys group. He served as Minister of State and President of the Central Bank under the dictatorship of Augusto Pinochet. In his youth, he was a member of the Christian Democratic Party.
José De Gregorio Rebeco is a Chilean economist, academic, researcher, consultant and politician. He has been the Governor of the Central Bank of Chile, Minister of the Economy, Mining and Energy during the administration of Ricardo Lagos and is currently the Dean of the School of Economics and Business of the Universidad de Chile. He is also a nonresident Senior Fellow at the Peterson Institute for International Economics.
Augusto José Ramón Pinochet Ugarte was a Chilean general and dictator who ruled Chile from 1973 to 1990, first as the leader of the Military Junta of Chile from 1973 to 1981, being declared President of the Republic by the junta in 1974 and becoming the de facto dictator of Chile, and from 1981 to 1990 as de jure president after a new constitution, which confirmed him in the office, was approved by a referendum in 1980. His rule remains the longest of any Chilean leader in history.
The Crisis of 1982 was a major economic crisis suffered in Chile during the military government of Chile (1973–1990). Chile's GDP fell 14.3%, and unemployment rose to 23.7%.
Chile joined the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD), the founding branch of the World Bank Group, on December 31, 1945.
Pinochetism is an authoritarian and personalistic political ideology rooted in the military dictatorship led in Chile between 1973 and 1990 by Augusto Pinochet. Variously described as right-wing, far-right, and semi-fascist, Pinochetism is characterised by its anti-communism, conservatism, militarism, nationalism and extreme capitalism. Under Pinochet, Chile's economy was placed under the control of a group of Chilean economists known collectively as the Chicago Boys, whose liberalising policies have been described by some as neoliberal. Former and current supporters of the dictatorship are known as pinochetistas.