The

economy of Chile The Economy of Chile is a market economy and high-income economy as ranked by the World Bank. The country is considered one of South America's most prosperous nations, leading the region in competitiveness, income per capita, globalization, ...

has shifted substantially over time from the heterogeneous economies of the diverse

indigenous peoples Indigenous peoples are culturally distinct ethnic groups whose members are directly descended from the earliest known inhabitants of a particular geographic region and, to some extent, maintain the language and culture of those original people ...

to an early husbandry-oriented economy and finally to one of

raw material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials that are feedstock for future finished products. As feeds ...

export and a large

service sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors in the three-sector model (also known as the economic cycle). The others are the primary sector (raw materials) and the second ...

. Chile's recent economic history (since 1973) has been the focus of an extensive debate from which

neoliberalism 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 f ...

acquired its modern meaning. Chile emerged into independence as a rural economy on what was the periphery of the

Spanish Empire The Spanish Empire ( es, link=no, Imperio español), also known as the Hispanic Monarchy ( es, link=no, Monarquía Hispánica) or the Catholic Monarchy ( es, link=no, Monarquía Católica) was a colonial empire governed by Spain and its prede ...

. A period of relative free trade that began with independence in the 1810s brought a modernizing development of certain sectors of the Chilean economy. This was accompanied by formation of a local business class, a novelty in Chile. Chile experienced its first modern economic crisis with the

Long depression The Long Depression was a worldwide price and economic recession, beginning in 1873 and running either through March 1879, or 1896, depending on the metrics used. It was most severe in Europe and the United States, which had been experiencing st ...

in the 1870s. The exploitation of lucrative nitrate deposits of the north conquered in the

War of the Pacific The War of the Pacific ( es, link=no, Guerra del Pacífico), also known as the Saltpeter War ( es, link=no, Guerra del salitre) and by multiple other names, was a war between Chile and a Bolivian–Peruvian alliance from 1879 to 1884. Fought ...

(1879–1884) marked a whole epoch in the history of Chile and the economic legacy of nitrate has been widely debated. When Chile became an independent nation in 1818 it was the poorest territory in the Americas, by the 1890s it had become richer than Sweden, and twice as rich than Japan and it became one of the 15 richest nations in the world, a position it would retain for decades, even as late as the 1950s it remained richer than its former colonial master, Spain, and almost as rich as Germany. However, starting in the late 1920s, the Chilean economy began a steady decline with 1950 industrial capacity inferior to what it had been forty years previously. It was not until the late 1970s that this decline started to revert. Since that time the Chilean economy has generally grown although it has yet to regain its former status. In the first half of the 20th century Chile suffered severe economic recessions including the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

. This period saw the rapid

urbanization Urbanization (or urbanisation) refers to the population shift from rural to urban areas, the corresponding decrease in the proportion of people living in rural areas, and the ways in which societies adapt to this change. It is predominantly th ...

of the country, and a state-led partial "industrialization" that began in 1939. Large-scale

copper mining Copper extraction refers to the methods used to obtain copper from its ores. The conversion of copper consists of a series of physical and electrochemical processes. Methods have evolved and vary with country depending on the ore source, loca ...

replaced nitrate extraction as the country's main source of wealth. Chilean agriculture remained one of the most undeveloped sectors of economy and was stagnant, despite land reforms in the 1960s and 1970s, from 1930 to 1980. In the mid-1970s under the influence of the

Chicago Boys 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 affiliat ...

, Pinochet's military dictatorship initiated profound changes oriented to a "neoliberal" economic model. The democratic governments that succeeded the dictatorship since 1990 have largely continued its economic policies, but increased social spending and reduced poverty. Chilean exports and

GDP per capita Lists of countries by GDP per capita list the countries in the world by their gross domestic product (GDP) per capita. The lists may be based on nominal or purchasing power parity GDP. Gross national income (GNI) per capita accounts for inflo ...

rose steadily through the 1980s and 1990s until the Asian crisis of 1997 after which economic growth slowed somewhat. In the post-1973 period there has been a rise in

outsourcing Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...

, self-employment,

informal employment An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countrie ...

and an increase in women's share in the

labor force The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic ...

.Salazar & Pinto 2002, pp. 184–187.

Pre-Hispanic economy

In the Far North the Pre-Hispanic economy of indigenous groups were divided among those that practised agriculture and were sedentary and the

Changos The Changos, also known as Camanchacos or Camanchangos, are an indigenous people or group of peoples who inhabited a long stretch of the Pacific coast from southern Peru to north-central Chile, including the coast of the Atacama desert. Althou ...

that lived as coastal

hunter-gatherer A traditional hunter-gatherer or forager is a human living an ancestrally derived lifestyle in which most or all food is obtained by foraging, that is, by gathering food from local sources, especially edible wild plants but also insects, fung ...

s. The sedentary groups raised

llama The llama (; ) (''Lama glama'') is a domesticated South American camelid, widely used as a meat and pack animal by Andean cultures since the Pre-Columbian era. Llamas are social animals and live with others as a herd. Their wool is soft ...

s and practised

irrigation Irrigation (also referred to as watering) is the practice of applying controlled amounts of water to land to help grow crops, landscape plants, and lawns. Irrigation has been a key aspect of agriculture for over 5,000 years and has been devel ...

techniques. Bone necklaces, gold and copper objects interpreted as

luxury good In economics, a luxury good (or upmarket good) is a good for which demand increases more than what is proportional as income rises, so that expenditures on the good become a greater proportion of overall spending. Luxury goods are in contrast t ...

s suggest according to Villalobos ''et al''. certain level of

social stratification Social stratification refers to a society's categorization of its people into groups based on socioeconomic factors like wealth, income, race, education, ethnicity, gender, occupation, social status, or derived power (social and politi ...

among the sedentary groups.Villalobos ''et al''. 1974, pp. 21–22. At the time of the arrival of the first Spaniards to Chile the largest indigenous population concentration was in the area spanning from

Itata River The Itata River flows in the Ñuble Region, southern Chile. Until the Conquest of Chile, the Itata was the natural limit between the Mapuche The Mapuche ( (Mapuche & Spanish: )) are a group of Indigenous peoples of the Americas, indigenous i ...

Chiloé Archipelago The Chiloé Archipelago ( es, Archipiélago de Chiloé, , ) is a group of islands lying off the coast of Chile, in the Los Lagos Region. It is separated from mainland Chile by the Chacao Channel in the north, the Sea of Chiloé in the east and t ...

.Otero 2006, p. 36. In this area indigenous groups practised glade agriculture among the forests.Otero 2006, pp. 21–22. The forests provided

firewood Firewood is any wooden material that is gathered and used for fuel. Generally, firewood is not highly processed and is in some sort of recognizable log or branch form, compared to other forms of wood fuel like pellets or chips. Firewood ca ...

, fibre and allowed the production of planks. Agriculture type varied; while some Mapuches and Huilliches practised a

slash-and-burn Slash-and-burn agriculture is a farming method that involves the cutting and burning of plants in a forest or woodland to create a field called a swidden. The method begins by cutting down the trees and woody plants in an area. The downed veget ...

type of agriculture some more labour-intensive agriculture is known to have been developed by Mapuches around

Budi Lake Budi Lake ( es, Lago Budi, ) from the Mapudungun word ''Füzi'' which means salt, is a tidal brackish water lake located near the coast of La Araucanía Region, southern Chile. The lake is part of the boundaries between Saavedra and Teodoro S ...

(

raised field In agriculture, a raised field is a large, cultivated elevation, typically bounded by water-filled ditches, that is used to allow cultivators to control environmental factors such as moisture levels, frost damage, and flooding. Examples of raised f ...

s) and the

Lumaco Lumaco is a town and commune in Malleco Province in the Araucanía Region of Chile. Its name in Mapudungun means "water of '' luma''". Lumaco is located to northeast of Temuco and from Angol. It shares a boundary to the north with the comm ...

and Purén valleys (canalized fields). Pre-Hispanic agriculture extended as far south as the

Guaitecas Archipelago Guaitecas Archipelago is a sparsely populated archipelago in the Aisén region of Chile. The archipelago is made up of eight main islands and numerous smaller ones. The eight largest islands are from northwest to southeast: Gran Guaiteca, Ascenc ...

(44° S), were indigenous Chonos cultivated Chiloé potatoes. Tools are known to have been relatively simple. In addition the Mapuche and Huilliche economy was complemented with

chilihueque The chilihueque or hueque was a South American camelid variety or species that existed in central and south-central Chile in Pre-Hispanic and colonial times. There are two main hypotheses on their status among South American camelids: the f ...

raising.Villalobos ''et al''. 1974, p. 50. The southern coast was particularly rich in

mollusc Mollusca is the second-largest phylum of invertebrate animals after the Arthropoda, the members of which are known as molluscs or mollusks (). Around 85,000 extant species of molluscs are recognized. The number of fossil species is est ...

s, algaes, crustaceans and fish. The fjords and channels of the Chilean Far South (excluding Chiloé Archipelago) were inhabited by nomadic

canoe A canoe is a lightweight narrow water vessel, typically pointed at both ends and open on top, propelled by one or more seated or kneeling paddlers facing the direction of travel and using a single-bladed paddle. In British English, the ter ...

-using hunter-gatherers. These groups included the Chonos, the Alacaluf and the Yaghans.Villalobos ''et al''. 1974, p. 57.

Colonial economy

Spanish conquest (1541–1600)

The conquest of Chile was not carried out directly by the Spanish Crown but by Spaniards that formed enterprises for those purposes and gathered financial resources and soldiers for the enterprise by their own.Villalobos ''et al''. 1974, p. 87. In 1541 an expedition (enterprise) led by

Pedro de Valdivia Pedro Gutiérrez de Valdivia or Valdiva (; April 17, 1497 – December 25, 1553) was a Spanish conquistador and the first royal governor of Chile. After serving with the Spanish army in Italy and Flanders, he was sent to South America in 1534, wh ...

founded

Santiago Santiago (, ; ), also known as Santiago de Chile, is the capital and largest city of Chile as well as one of the largest cities in the Americas. It is the center of Chile's most densely populated region, the Santiago Metropolitan Region, whos ...

initiating the conquest of Chile. The first years were harsh for the Spaniards mainly due to their poverty, indigenous rebellions and frequent conspirations.Villalobos ''et al''. 1974, pp. 97–99. The second founding of La Serena in 1549 (initially founded in 1544 but destroyed by natives) was followed by the founding of numerous new cities in southern Chile halting only after Valdivia's death in 1553. The Spanish colonization of the Americas was characterized by the establishments of cities in the middle of conquered territories. With the founding of each city a number of

conquistador Conquistadors (, ) or conquistadores (, ; meaning 'conquerors') were the explorer-soldiers of the Spanish and Portuguese Empires of the 15th and 16th centuries. During the Age of Discovery, conquistadors sailed beyond Europe to the Americas, ...

es became '' vecinos'' of that city being granted a '' solar'' and possibly also a ''

chacra Chacra is an Andean term (a loanword from the Quechua word ''chakra'', meaning "farm, agricultural field, or land sown with seed";Teofilo Laime Ajacopa, Diccionario Bilingüe Iskay simipi yuyayk'ancha, La Paz, 2007 (Quechua-Spanish dictionary)< ...

'' in the outskirts of the city, or a

hacienda An ''hacienda'' ( or ; or ) is an estate (or '' finca''), similar to a Roman '' latifundium'', in Spain and the former Spanish Empire. With origins in Andalusia, ''haciendas'' were variously plantations (perhaps including animals or orchard ...

or estancia in more far away parts of the countryside. Apart from land natives were also distributed among Spaniards since they were considered vital for carrying out any economic activity.Villalobos ''et al''. 1974, pp. 109–113. Beyond subsistence the 16th century economy of Chile was oriented towards large-scale production. Spanish colonizers used large amounts of indigenous labour following the slave labour system used in the

sugar cane Sugarcane or sugar cane is a species of (often hybrid) tall, perennial grass (in the genus '' Saccharum'', tribe Andropogoneae) that is used for sugar production. The plants are 2–6 m (6–20 ft) tall with stout, jointed, fibrous stalk ...

plantations of the

Mediterranean islands The following is a list of islands in the Mediterranean Sea. The two main island countries in the region are Malta and Cyprus, while other countries with islands in the Mediterranean Sea include Italy, France, Greece, Spain, Tunisia, Croatia, ...

and

Macaronesia Macaronesia (Portuguese: ''Macaronésia,'' Spanish: ''Macaronesia'') is a collection of four volcanic archipelagos in the North Atlantic, off the coasts of Africa and Europe. Each archipelago is made up of a number of Atlantic oceanic islands ...

. This system of labour successively killed the production base leading to the imposition of the

encomienda The ''encomienda'' () was a Spanish labour system that rewarded conquerors with the labour of conquered non-Christian peoples. The labourers, in theory, were provided with benefits by the conquerors for whom they laboured, including military ...

system by the Spanish Crown in order to prevent excesses. In Chile Spanish settlers managed to continue to exploit indigenous labour under slave like conditions despite the implementation of the encomienda. Rich Spanish settlers had over time to face opposition to their mode of production by

Jesuit , image = Ihs-logo.svg , image_size = 175px , caption = ChristogramOfficial seal of the Jesuits , abbreviation = SJ , nickname = Jesuits , formation = , founders ...

s, Spanish officials and indigenous

Mapuche The Mapuche ( (Mapuche & Spanish: )) are a group of indigenous inhabitants of south-central Chile and southwestern Argentina, including parts of Patagonia. The collective term refers to a wide-ranging ethnicity composed of various groups who s ...

s.Salazar 1985, pp. 23–25. Pedro De Valdivia Siedlungen in Chile 1540 bis 1553

The initial Spanish settlers of

(conquered in 1567) attempted to base their economy on gold extraction and a "hispanic-mediterranean" agricultural model. This activity ended in a general failure given the unsuitable conditions of the archipelago. Spaniards however reoriented their activities into logging ''

Fitzroya ''Fitzroya'' is a monotypic genus in the cypress family. The single living species, ''Fitzroya cupressoides'', is a tall, long-lived conifer native to the Andes mountains and coastal of southern Chile, and only to the Andes mountains Argentina, ...

''.

Century of suet (1600–1687)

The collapse of the Spanish cities in the south following the

battle of Curalaba The Battle of Curalaba ( es, Batalla de Curalaba, links=no ) is a 1598 battle and ambush where Mapuche people led by Pelantaru soundly defeated Spanish conquerors led by Martín García Óñez de Loyola at Curalaba, southern Chile. In Chilea ...

(1598) meant for the Spaniards the loss of both the main gold districts and the largest indigenous labour sources.Salazar & Pinto 2002, p. 15. After those dramatic years the colony of Chile became concentrated in the central valley which became increasingly populated, explored and economically exploited. Following a tendency common in the whole

Spanish America Spanish America refers to the Spanish territories in the Americas during the Spanish colonization of the Americas. The term "Spanish America" was specifically used during the territories' imperial era between 15th and 19th centuries. To the e ...

s were formed as the economy moved away from mining and into agriculture and husbandry. Compared to the 16th and 18th centuries Chilean mining activity in the 17th century was very limited.Villalobos ''et al''. 1974, p. 168. Over the course of the 17th century the indigenous population of Chile declined, making the

s less and less important.Villalobos ''et al''. 1974, pp. 160–165. Chilean encomenderos who had encomiendas in Cuyo, across the Andes, introduced to Chile indigenous

Huarpes The Huarpes or Warpes are an indigenous people of Argentina, living in the Cuyo region. Some scholars assume that in the Huarpe language, this word means "sandy ground," but according to ''Arte y Vocabulario de la lengua general del Reino de Chi ...

who they hired to other Spanish without encomiendas.Villalobos ''et al''. 1974, pp. 166–170. In the 17th century economy of the

Viceroyalty of Peru The Viceroyalty of Peru ( es, Virreinato del Perú, links=no) was a Spanish imperial provincial administrative district, created in 1542, that originally contained modern-day Peru and most of the Spanish Empire in South America, governed fro ...

, Chile's husbandry and agriculture based economy had a peripheral role, contrasting to ore-rich districts like

Potosí Potosí, known as Villa Imperial de Potosí in the colonial period, is the capital city and a municipality of the Department of Potosí in Bolivia. It is one of the highest cities in the world at a nominal . For centuries, it was the location o ...

and the wealthy city of

Lima Lima ( ; ), originally founded as Ciudad de Los Reyes (City of The Kings) is the capital and the largest city of Peru. It is located in the valleys of the Chillón, Rímac and Lurín Rivers, in the desert zone of the central coastal part of ...

. Husbandry products made up the bulk of Chilean exports to the rest of the viceroyalty. These products included

suet Suet is the raw, hard fat of beef, lamb or mutton found around the loins and kidneys. Suet has a melting point of between 45 °C and 50 °C (113 °F and 122 °F) and congelation between 37 °C and 40 °C (98.6& ...

charqui Jerky is lean trimmed meat cut into strips and dried (dehydrated) to prevent spoilage. Normally, this drying includes the addition of salt to prevent bacteria growth before the meat has finished the dehydrating process. The word "jerky" derive ...

and

leather Leather is a strong, flexible and durable material obtained from the tanning, or chemical treatment, of animal skins and hides to prevent decay. The most common leathers come from cattle, sheep, goats, equine animals, buffalo, pigs and hog ...

. This trade made Chilean historian

Benjamín Vicuña Mackenna Benjamín Vicuña Mackenna (August 25, 1831 – January 25, 1886) was a Chilean writer, journalist, historian and politician. Vicuña Mackenna was of Irish and Basque descent. Biography Benjamín Vicuña Mackenna was born in Santiago, the ...

label the 17th century the ''century of suet'' (Spanish: Siglo del sebo). Villalobos, Sergio; Retamal Ávila, Julio and Serrano, Sol. 2000. ''Historia del pueblo Chileno''. Vol 4. p. 154. Other products exported included dry fruits, mules, wines and minor amounts of copper. Trade with Peru was controlled by merchants from Lima that enjoyed protection by the Spanish authorities in Lima. In addition to the exports to coastal Peru Chile also exported products inland to

Upper Peru Upper Peru (; ) is a name for the land that was governed by the Real Audiencia of Charcas. The name originated in Buenos Aires towards the end of the 18th century after the Audiencia of Charcas was transferred from the Viceroyalty of Peru to t ...

through the port of

Arica Arica ( ; ) is a commune and a port city with a population of 222,619 in the Arica Province of northern Chile's Arica y Parinacota Region. It is Chile's northernmost city, being located only south of the border with Peru. The city is the capita ...

. Trade inside Chile was small since cities were tiny and self-sufficient. Generally the extraction of wood had little importance in colonial Chile but

and

Valdivia Valdivia (; Mapuche: Ainil) is a city and commune in southern Chile, administered by the Municipality of Valdivia. The city is named after its founder Pedro de Valdivia and is located at the confluence of the Calle-Calle, Valdivia, and Cau-Ca ...

were exceptions.Villalobos ''et al''. 1974, p. 225. These two areas exported planks to Peru. With the destruction of Valdivia in 1599 Chiloé gained increased importance as the only locale that could supply the Viceroyalty of Peru with ''

'' wood. In 1641 the first large shipment of ''Fitzroya'' wood left Chiloé.Torrejón, Fernando; Cisternas, Marco; Alvial, Ingrid and Torres, Laura. 2011
Consecuencias de la tala maderera colonial en los bosques de alece de Chiloé, sur de Chile (Siglos XVI–XIX)*
''

Magallania ''Magallania'' is an academic journal published by the University of Magallanes. It publishes articles on social sciences and humanities regarding Patagonia, Tierra del Fuego, and Antarctica Antarctica () is Earth's southernmost and lea ...

''. Vol. 39(2):75–95.

Century of wheat (1687–1810)

In the 1650–1800 period the Chilean lower classes grew considerably in size.Salazar 1985, p. 49. To deal with the poor and landless population a policy of founding citiesThese cities were often in fact more of villages or towns due to their size. and granting lands in their surroundings was implemented. From 1730 to 1820 a large number of farmers settled in the outskirts of old cities or formed new cities. Settling as a farmer in the outskirts of old cities ( La Serena,

Valparaíso Valparaíso (; ) is a major city, seaport, naval base, and educational centre in the commune of Valparaíso, Chile. "Greater Valparaíso" is the second largest metropolitan area in the country. Valparaíso is located about northwest of Santiago ...

and Concepción) was overall more popular than joining a new city since it secured a larger consumer market for agricultural products. Chilean

s (

latifundia A ''latifundium'' (Latin: ''latus'', "spacious" and ''fundus'', "farm, estate") is a very extensive parcel of privately owned land. The latifundia of Roman history were great landed estates specializing in agriculture destined for export: grain, o ...

) engaged little in the supply of Chilean cities but focused on international exports for revenues. Chile begun exporting cereals to

Peru , image_flag = Flag of Peru.svg , image_coat = Escudo nacional del Perú.svg , other_symbol = Great Seal of the State , other_symbol_type = National seal , national_motto = "Firm and Happy f ...

in 1687 when Peru was struck by both an earthquake and a stem rust

epidemic An epidemic (from Greek ἐπί ''epi'' "upon or above" and δῆμος ''demos'' "people") is the rapid spread of disease to a large number of patients among a given population within an area in a short period of time. Epidemics of infectious ...

.Villalobos ''et al''. 1974, pp. 155–160. Chilean soil and climatic conditions were better for cereal production than those of Peru and Chilean wheat was cheaper and of better quality than Peruvian wheat.Collier, Simon and Sater William F. 2004. ''A History of Chile: 1808–2002''

Cambridge University Press Cambridge University Press is the university press of the University of Cambridge. Granted letters patent by King Henry VIII in 1534, it is the oldest university press in the world. It is also the King's Printer. Cambridge University Pr ...

. p. 10. According to historians Villalobos ''et al''. the 1687 events were only the detonant factor for exports to start. The

Chilean Central Valley The Central Valley ( es, Valle Central), Intermediate Depression, or Longitudinal Valley is the depression between the Chilean Coastal Range and the Andes Mountains. The Chilean Central Valley extends from the border with Peru to Puerto Montt in ...

, La Serena and Concepción were the districts that came to be involved in cereal export to Peru. It should be pointed out that compared with the 19th century the area cultivated with wheat was very small and production modest. Initially Chilean

could not meet the wheat demand due to a labour shortage, so had to incorporate temporal workers in addition to the permanent staff. Another response by the latifundia to labour shortages was to act as merchants buying wheat produced by independent farmers or from farmers that hired land. In the period 1700 to 1850 this second option was overall more lucrative. The 1687 Peru earthquake also ended a Peruvian wine-boom as the earthquake destroyed

wine cellar A wine cellar is a storage room for wine in bottles or barrels, or more rarely in carboys, amphorae, or plastic containers. In an ''active'' wine cellar, important factors such as temperature and humidity are maintained by a climate control system ...

s and mud containers used for wine storage.

/ref> The gradual decline of Peruvian wine even caused Peru to import some wine from Chile as it happened in 1795 when Lima imported 5.000 troves (Spanish: ''botijas'') from Concepción in southern Chile. This particular export showed the emergence of Chile relative to Peru as a wine-making region. Haciendas of central Chile are believed to had become labour-saturated by 1780 generating an "excess" population that could not be incorporated into their economy.Salazar 1985, pp. 153–154. Some of this population settled in the outskirts of larger cities while other migrated to the mining districts of Norte Chico, Chile, Norte Chico. Chile saw an unprecedented revival of its mining activity in the 18th century with annual gold production rising from 400 to 1000 kg over the course of the century and the silver annual production rising from 1000 to 5000 kg in the same interval.Villalobos ''et al''. 1974, pp. 226–227. In the 18th century the shipbuilding industry in

, one of the city's main economic activities, reached its peak building numerous ships including

frigate A frigate () is a type of warship. In different eras, the roles and capabilities of ships classified as frigates have varied somewhat. The name frigate in the 17th to early 18th centuries was given to any full-rigged ship built for speed an ...

s.Guarda 1973, pp. 45–47. Other shipyards of Chile included those of Concepción and

. The Chiloé shipyards constructed the bulk of the ships in Chile until the mid-18th century. In 1794 a new shipyards was established the mouth of

Maule River The Maule river or Río Maule ( Mapudungun: ''rainy'') is one of the most important rivers of Chile. It is inextricably linked to the country's pre-Hispanic (Inca) times, the country's conquest, colonial period, wars of Independence, modern hi ...

(present day Constitución). Despite some navigators expressing that Valdivia had better conditions than

Guayaquil , motto = Por Guayaquil Independiente en, For Independent Guayaquil , image_map = , map_caption = , pushpin_map = Ecuador#South America , pushpin_re ...

in Ecuador, this last port was the chief shipyard of the Spanish Empire in the Pacific. García Carrasco cropped

Direct trade with Spain over the

Straits of Magellan The Strait of Magellan (), also called the Straits of Magellan, is a navigable sea route in southern Chile separating mainland South America to the north and Tierra del Fuego to the south. The strait is considered the most important natural pas ...

and

Buenos Aires Buenos Aires ( or ; ), officially the Autonomous City of Buenos Aires ( es, link=no, Ciudad Autónoma de Buenos Aires), is the capital and primate city of Argentina. The city is located on the western shore of the Río de la Plata, on South ...

begun first in the 18th century constituting primarily an export route for gold, silver and copper from Chilean mining. By the same time Spain's trade monopoly with its colonies was successively weakened by smugglers from England, France and United States.Salazar & Pinto 2002, pp. 16–17.

Independence Era (1810–1830)

The independence wars in Chile (1810–1818) and Peru (1809–1824) had a negative impact on the Chilean economy. Trade was disrupted and armies in Chile pillaged the countryside. The war made commerce a high risk activity and royalist Peru, then the only market for Chilean agricultural products, was closed to commerce with independent Chile. The Guerra a muerte phase was particularly destructive for the Biobío area and ended only to see a period of outlaw banditry (e.g. Pincheira brothers) occur until the late 1820s. Chilean mining activity came out of the independence wars with relatively little damage.Villalobos ''et al''. 1974, pp. 406–413. Trade with Peru did not fully recover after the independence struggles, instead commerce with United States, France and United Kingdom took off in the 1820s. During the Chilean Independence War the scarcity of weapons in the Chilean market forced the patriots to do large weapon purchases abroad or to the ships that anchored at Chilean ports.Villalobos ''et al''. 1974, pp. 416–420. In addition to the finance of the Chilean army the nascent Chilean state had also to wholly finance the Chilean-Argentine

Army of the Andes The Army of the Andes ( es, Ejército de los Andes) was a military force created by the United Provinces of the Río de la Plata (Argentina) and mustered by general José de San Martín in his campaign to free Chile from the Spanish Empire. In 181 ...

after San Martín begun to disobey the orders from Argentina and the

Freedom Expedition of Perú The Liberating Expedition of Peru ( es, Expedición Libertadora del Perú) was a naval and land military force created in 1820 by the government of Chile in continuation of the plan of the Argentine General José de San Martín to achieve the in ...

, originally thought to be financed in part by Argentina.Simon Collier, William F. Sater, ''A history of Chile, 1808–1994'', Cambridge University Press, 1999, p. 39, An expensive loan of £1,000,000 taken in 1822 in

London London is the capital and List of urban areas in the United Kingdom, largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary dow ...

in order to finance the independence struggle became a heavy burden for the Chilean state and took decades to pay off. Finance minister

Diego José Benavente Diego José Benavente Bustamante (born 1790–21 June 1867) was a Chilean politician A politician is a person active in party politics, or a person holding or seeking an elected office in government. Politicians propose, support, reject an ...

attempted to reform the tax system but met severe opposition to many measures. To pay off the loan the Chilean state granted the company '' Sociedad Portales, Cea y Cía'' a sales monopoly of tobacco in Chile, but this activity ended in failure.

Liberalism

Early republican boom (1830–1873)

In the early republican period Chilean international trade grew considerably.Salazar & Pinto 2002, pp. 19–21. Merchants from countries like England, Italy, Germany and the United States settled in Chile. Chile was officially open to trade to all nations since 1811 but applied protectionist policies to favour domestic production in a manner that has been called neomercantilism. Chile's relative openness to international trade contrasted with contemporary truly protectionistic policies of Peru and Argentina. The 1830–1870 period was one of the greatest growth for the Chilean economy and was largely indebted to two export booms: the copper and silver mining in Norte Chico and the Chilean wheat cycle.Salazar & Pinto 2002, p. 23. The overall development resulted in Chile becoming one of the high-income countries in South America. Estacion de Chañarcillo 1862 de Rafael Castro y Ordoñez

Estacion de Chañarcillo 1862 de Rafael Castro y Ordoñez

Following the discovery of

silver Silver is a chemical element with the symbol Ag (from the Latin ', derived from the Proto-Indo-European ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, white, lustrous transition metal, it exhibits the highest electrical ...

Agua Amarga Agua Amarga (lit. ''Bitter Water'') is a silver deposit and defunct mining district in Chile's Atacama Region. It is located 30 km south of Vallenar. Agua Amarga was discovered in 1811 and its silver was instrumental to finance the Chilean ...

(1811) and

Arqueros Arqueros is a mining district in the Chilean Norte Chico region. It is located 7 km northwest of the Talcuna copper district.Norte Chico, Chile, Norte Chico mountains north of La Serena were exhaustively prospected.Villalobos ''et al''. 1974, pp. 469–472.
Los ciclos mineros del cobre y la plata
'. Memoria Chilena.Bethell, Leslie. 1993. ''Chile Since Independence''. Cambridge University Press. p. 13–14. In 1832 prospector

Juan Godoy Juan Godoy (1800 – 1842) was a Chilean farmer and miner who in 1832 discovered an outcrop (''reventón'') of silver south of Copiapó in Chañarcillo sparking the Chilean silver rush. Villalobos, Sergio; Silva, Osvaldo; Silva Fernando and E ...

found a silver

outcrop An outcrop or rocky outcrop is a visible exposure of bedrock or ancient superficial deposits on the surface of the Earth. Features Outcrops do not cover the majority of the Earth's land surface because in most places the bedrock or superficia ...

(''reventón'') 50 km south of

Copiapó Copiapó () is a city and commune in northern Chile, located about 65 kilometers east of the coastal town of Caldera. Founded on December 8, 1744, it is the capital of Copiapó Province and Atacama Region. Copiapó lies about 800 km nor ...

Chañarcillo Chañarcillo is a town and mine in the Atacama Desert of Copiapó Province, Atacama Region, Chile, located near Vallenar and 60 km from Copiapó. It is noted for its silver mining. The town grew up after the Chañarcillo silver mine was discovere ...

. The finding attracted thousands of people to the place and generated significant wealth. After the discovery of Chañarcillo, many other ores were discovered near Copiapó well into the 1840s. Copiapó experienced a large demographic and urbanistic growth during the rush. The town became a centre for trade and services of a large mining district. The mining zone slowly grew northwards into the diffuse border with Bolivia. At the end of the silver rush rich miners had diversified their assets into banking,

agriculture Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people ...

, trade and commerce all over Chile. Ocupacion de la Araucanía 1869

In the 19th century, access to the

California California is a state in the Western United States, located along the Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the most populous U.S. state and the 3rd largest by area. It is also the m ...

n and

Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...

n markets made wheat export a very lucrative activity.
La Hacienda (1830–1930)
'. Memoria Chilena. In the mid 19th century, these countries experienced large

gold rush A gold rush or gold fever is a discovery of gold—sometimes accompanied by other precious metals and rare-earth minerals—that brings an onrush of miners seeking their fortune. Major gold rushes took place in the 19th century in Australia, New ...

es which created a large demand for wheat. Chile was at the time the "only wheat producer of some importance in the Pacific".Villalobos ''et al''. 1974, pp. 481–485. At the same time as the wheat cycle new irrigation canals were built and

apiculture Beekeeping (or apiculture) is the maintenance of bee colonies, commonly in man-made beehives. Honey bees in the genus '' Apis'' are the most-commonly-kept species but other honey-producing bees such as '' Melipona'' stingless bees are also kept. ...

and some machines introduced into Chilean agriculture.Economía chilena durante el siglo XIX
Cristián Sepúlveda Irribarra. Apart from that, new markets were explored for Chilean agricultural products. The wheat boom did not last for long; by 1855 California managed to supply itself with wheat and from 1858 onwards it went over to export wheat to Chile. The Australian gold rush of 1851 had the effect of decreasing the labour used in agriculture forcing the colony to import wheat from Chile sustaining Chilean wheat exports whilst the Californian market vanished. After the gold rushes of California and Australia were over these regions begun exporting wheat competing with Chilean wheat forcing from the mid-1860s onwards wheat exports to be shifted to England. Between 1850 and 1875 the area cultivated with wheat and barley for export in Chile rose from 120 to 450 ha.Salazar & Pinto 2002, p. 102. The "cycle" came to an end in the late 1870s due to the increased technification of

in the United States and Argentina plus the competition of

Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-ei ...

and Canada.Salazar & Pinto 2002, pp. 25–29. The end of the wheat cycle added to the already difficult situation that Chilean economy was passing through in the 1870s. In the mid-19th century the value relationship established by law between gold and silver coin undervalued silver coins causing the flight of silver from Chile due to better prices in the international market and a scarcity of silver coins in Chile. With the abolition of the

silver standard The silver standard is a monetary system in which the standard economic unit of account is a fixed weight of silver. Silver was far more widespread than gold as the monetary standard worldwide, from the Sumerians 3000 BC until 1873. Following ...

in most countries that begun in Germany in 1871 the unadjusted Chilean rate that had previously undervalued silver came to undervalue gold instead. Following independence in 1820

entered a period of economic decline. This was because Valdivia was since colonial times isolated from Central Chile by hostile Mapuche territory and depended heavily upon seaborne trade with the port of

Callao Callao () is a Peruvian seaside city and region on the Pacific Ocean in the Lima metropolitan area. Callao is Peru's chief seaport and home to its main airport, Jorge Chávez International Airport. Callao municipality consists of the whole Cal ...

Peru , image_flag = Flag of Peru.svg , image_coat = Escudo nacional del Perú.svg , other_symbol = Great Seal of the State , other_symbol_type = National seal , national_motto = "Firm and Happy f ...

. With independence this intra-colonial traded ended but was not substituted by new routes. German immigrants that arrived from 1850 to 1875 transformed the economy of Valdivia and the whole Southern Chile. Among the achievements of the Germans immigrants was the deepening of

division of labour The division of labour is the separation of the tasks in any economic system or organisation so that participants may specialise (specialisation). Individuals, organizations, and nations are endowed with, or acquire specialised capabilities, an ...

, the introduction of

wage labour Wage labour (also wage labor in American English), usually referred to as paid work, paid employment, or paid labour, refers to the socioeconomics, socioeconomic relationship between a workforce, worker and an employment, employer in which the w ...

in agriculture and the establishment of Chile's first beer brewery in Valdivia in 1851 by Carl Anwandter. Until the mid-19th century more than 80% of Chilean population remained rural working in agriculture or mining and was to a large degree self-sufficient to produce articles of consume.Salazar & Pinto 2002, pp. 133–134.

Saltpetre Republic (1873–1914)

Starting in 1873, Chile's economy deteriorated. Chilean wheat exports were outcompeted by production in Canada, Russia, and Argentina. Chilean copper was largely replaced in international markets by copper from the United States and Río Tinto in

Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = '' Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , ...

.Villalobos ''et al''. 1974, pp. 603–605. Chile's

silver mining Silver mining is the extraction of silver from minerals, starting with mining. Because silver is often found in intimate combination with other metals, its extraction requires elaborate technologies. In 2008, ca.25,900 metric tons were consumed ...

income also dropped. In the mid-1870s, Peru nationalized its nitrate industry, affecting both British and Chilean interests.Palma, Gabriel. ''Trying to 'Tax and Spend' Oneself out of the 'Dutch Disease': The Chilean Economy from the War of the Pacific to the Great Depression''. p. 217–240 Contemporaries considered the crisis the worst ever of independent Chile. Chilean newspaper '' El Ferrocarril'' predicted 1879 to be "a year of mass business liquidation". In 1878, then-President

Aníbal Pinto Aníbal Pinto Garmendia (; March 15, 1825June 9, 1884) was a Chilean political figure. He served as the president of Chile between 1876 and 1881. Early life He was born in Santiago, Chile, Santiago de Chile, the son of former Chilean president G ...

expressed his concern through the following statement: Humberstone

It was during this context of economic crisis that Chile became involved the costly

(1879–1883) seizing control of mineral-rich provinces of

Peru , image_flag = Flag of Peru.svg , image_coat = Escudo nacional del Perú.svg , other_symbol = Great Seal of the State , other_symbol_type = National seal , national_motto = "Firm and Happy f ...

and

Bolivia , image_flag = Bandera de Bolivia (Estado).svg , flag_alt = Horizontal tricolor (red, yellow, and green from top to bottom) with the coat of arms of Bolivia in the center , flag_alt2 = 7 × 7 square p ...

. The notion that Chile entered the war to obtain economical gains has been a topic of debate among historians. The crisis in has also been considered by

Jorge Pinto Rodríguez Jorge Manuel Pinto Rodríguez, ( La Serena 18 December 1944) is a Chilean historian. He is known in Chile for his study of the history of Araucanía, social history Social history, often called the new social history, is a field of history t ...

a force behind the new pulse of conquest of indigenous lands that took place in Araucanía in the 1870s. When Chile found herself in command of the then still Peruvian province of Tarapacá during the War of the Pacific and being subjected to pressure from Peru's

creditor A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...

s, who threatened Chile's credit in Europe if their claims were not met, the Chilean government essentially had two options: to nationalize the industry for Chile (that is to pay the Peruvian debt certificates), or to recognize the holders of the Peruvian debt certificates (which John Thomas North hurried to purchase at knock-down prices) as the owner of the assets. On June 11, 1881 Chile issued a decree in favor of the second option and to enact an export tax upon the export of saltpeter. The Chilean war debts, the impossibility to assume the financial obligations of nitrate certificates and the will to deflate European opposition to the annexation were the reasons to the decree that was criticized in Chile after the war. As the victor and possessor of a new coastal territory following the War of the Pacific, Chile benefited by gaining a lucrative territory with significant mineral income. The national treasury grew by 900 percent between 1879 and 1902, due to taxes coming from the newly acquired lands. British involvement and control of the nitrate industry rose significantly,Foster, John B. & Clark, Brett. (2003)
"Ecological Imperialism: The Curse of Capitalism"
(accessed September 2, 2005). ''The Socialist Register 2004'', pp. 190–192. Also available in print from Merlin Press. but from 1901 to 1921 Chilean ownership increased from 15% to 51%.Salazar & Pinto 2002, pp. 124–125. The growth of Chilean economy sustained in its saltpetre monopoly meant, compared to the previous growth cycle (1832–1873), that the economy became less diversified and overly dependent on a single natural resource. In addition the Chilean nitrate, used worldwide as fertilizer, was sensitive to economic downturns as farmers made cuts on fertilizer use one of their earliest economic measures in the face of economic decline. It has been questioned on whether the nitrate wealth conquered in the War of the Pacific was a

resource curse The resource curse, also known as the paradox of plenty or the poverty paradox, is the phenomenon of countries with an abundance of natural resources (such as fossil fuels and certain minerals) having less economic growth, less democracy, or worse ...

or not. During the Nitrate Epoch the government increased public spending but was however accused of squandering money. The 1870s saw of industries like sugar refineries, confectioneries and shoe and textile factories emerge.Salazar & Pinto 2002, p. 135. Since the 1880s some scholars argue that Chile was en route to becoming an

industrialized Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econ ...

nation before 1914, economist Ducoing claims no industrialization took place, but rather a

modernization Modernization theory is used to explain the process of modernization within societies. The "classical" theories of modernization of the 1950s and 1960s drew on sociological analyses of Karl Marx, Emile Durkheim and a partial reading of Max Weber, ...

process.

Starting in 1878, the Chilean state increased the issuing of new

banknote A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable instrument, negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes w ...

s (

fiat currency Fiat money (from la, fiat, "let it be done") is a type of currency that is not backed by any commodity such as gold or silver. It is typically designated by the issuing government to be legal tender. Throughout history, fiat money was some ...

) causing the Chilean peso to devaluate. When the War of the Pacific began in 1879 the government issued more fiat currency in order to afford the costly war, and continued to do so in 1880 and 1881. In 1881 the country prepared for a return to the gold standard and to gradually eliminate fiat currency. However, during the Chilean Civil War in 1891 the government of

José Manuel Balmaceda José Manuel Emiliano Balmaceda Fernández (; July 19, 1840 – September 19, 1891) served as the 10th President of Chile from September 18, 1886, to August 29, 1891. Balmaceda was part of the Castilian-Basque aristocracy in Chile. While he was ...

issued more fiat money to finance this new war. By 1891 a dispute begun between those who supported a return to gold

convertibility Convertibility is the quality that allows money or other financial instruments to be converted into other liquid stores of value. Convertibility is an important factor in international trade, where instruments valued in different currencies mus ...

of money ("oreros") and those who opposed convertibility ("papeleros"). In 1892 the "oreros" succeeded in having the convertibility of currency approved by law and in December 1895 non-convertible legal tender was pulled out of circulation. In 1898 the convertible regime collapsed once again in the face of severe economic instability (crop failure, war scare) and was abolished. Issuing of fiat money then continued until 1907 but from there on currency was issued with convertibility to gold or saltpetre mining related legal titles. Vendedor ambulante Chile inicios siglo XX

Vendedor ambulante Chile inicios siglo XX

The establishment of the Buenos Aires-Mendoza railroad in 1885 ended the lengthy and costly trade with

cart A cart or dray (Australia and New Zealand) is a vehicle designed for transport, using two wheels and normally pulled by one or a pair of draught animals. A handcart is pulled or pushed by one or more people. It is different from the flatbed ...

s that connected these two regions of Argentina and facilitated cattle exports from the

pampas The Pampas (from the qu, pampa, meaning "plain") are fertile South American low grasslands that cover more than and include the Argentine provinces of Buenos Aires, La Pampa, Santa Fe, Entre Ríos, and Córdoba; all of Uruguay; and Brazi ...

to Chile, albeit in the last portion of the route the cattle had to walk over the high

mountain pass A mountain pass is a navigable route through a mountain range or over a ridge. Since many of the world's mountain ranges have presented formidable barriers to travel, passes have played a key role in trade, war, and both human and animal migr ...

es of the

Andes The Andes, Andes Mountains or Andean Mountains (; ) are the longest continental mountain range in the world, forming a continuous highland along the western edge of South America. The range is long, wide (widest between 18°S – 20°S ...

.Benjamin S. 1997. Meat and Strength: The Moral Economy of a Chilean Food Riot. ''

Cultural Anthropology Cultural anthropology is a branch of anthropology focused on the study of cultural variation among humans. It is in contrast to social anthropology, which perceives cultural variation as a subset of a posited anthropological constant. The portma ...

'', 12, pp. 234–268. These imports resulted in a lowering of meat prices in Chile. ''

Sociedad Nacional de la Agricultura The ''Sociedad Nacional de Agricultura'' (S.N.A.; Spanish for ''National Agriculture Society'') is a guild association grouping landowners, professionals and minor associations involved in agriculture in Chile Agriculture in Chile encompasses ...

'' (National Agriculture Society), a landowners organization, pushed for a tariff on Argentine cattle and in 1897 the tariff was passed in a bill at the Chilean congress. The unpopular tariff resulted a massive protest in that degenerated into a destructive riot in Santiago in October 1905. Chilean wine exports to Argentina were hampered by the lack of effective land transport and a series of war scares. This situation changed after the

Pactos de Mayo The Pacts of May ( es, Pactos de Mayo) are four protocols signed in Santiago de Chile by Chile and Argentina on 28 May 1902 in order to extend their relations and resolve its territorial disputes. The disputes had led both countries to increase th ...

were signed in 1902 and the inauguration of the

Transandine Railway The Transandine Railway ( es, Ferrocarril Trasandino) was a combined rack ( Abt system) and adhesion railway which operated from Mendoza in Argentina, across the Andes mountain range via the Uspallata Pass, to Santa Rosa de Los Andes in C ...

in 1909, making war unlikely and trade across the Andes easier. Both governments agreed to sign a free trade agreement. The Argentine winegrowers association, '' Centro Vitivinícola Nacional'', seeing Chilean wines as a threat to domestic industry, protested vigorously against the agreement. Their complaints, in conjunction with that of Chilean cattle farmers represented by ''Sociedad Nacional de la Agricultura'' ended up tearing down the plans for a free trade agreement between Argentina and Chile. The rapid economic expansion of the late 19th century occurred not only in the northern regions but also in the extreme south where in

Tierra del Fuego Tierra del Fuego (, ; Spanish for "Land of the Fire", rarely also Fireland in English) is an archipelago off the southernmost tip of the South American mainland, across the Strait of Magellan. The archipelago consists of the main island, Isla ...

a gold rush was triggered in 1884 fueled economic growth in

Punta Arenas Punta Arenas (; historically Sandy Point in English) is the capital city of Chile's southernmost region, Magallanes and Antarctica Chilena. The city was officially renamed as Magallanes in 1927, but in 1938 it was changed back to "Punta Are ...

and attracted a considerable amount of European immigrants. Martinic Beros, Mateo. ''Crónica de las Tierras del Canal Beagle''. 1973. Editorial Francisco de Aguirre S.A. pp. 65–75 Tierra del Fuego and much of Magallanes Region also experienced a boom in the sheepherding industry since the 1880s accompanied by colonization of the sparsely populated

Patagonian grasslands The Patagonian grasslands (NT0804) is an ecoregion in the south of Chile, Argentina and the Falkland Islands. The grasslands are home to diverse fauna, including several rare or endemic species of birds. There are few protected areas. The grasslan ...

. In the South-Central Araucanía the Chilean invasion of native

territory caused the economy of Araucanía to change from being based on sheep and cattle herding to one based on

and wood extraction. The Mapuches' loss of land following the occupation caused severe

erosion Erosion is the action of surface processes (such as water flow or wind) that removes soil, rock, or dissolved material from one location on the Earth's crust, and then transports it to another location where it is deposited. Erosion is d ...

since Mapuches continued to practice large-scale livestock herding in limited areas.Bengoa 2000, pp. 262–263.

Crisis and restructuring (1914–1938)

The opening of

Panama Canal The Panama Canal ( es, Canal de Panamá, link=no) is an artificial waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean and divides North and South America. The canal cuts across the Isthmus of Panama and is a condui ...

in 1914 caused a severe drop in traffic along Chilean ports due to shifts in the maritime trade routes.Figueroa, Victor; Gayoso, Jorge; Oyarzun, Edgardo; Planas, Lenia
"Investigación aplicada sobre Geografía Urbana: Un caso práctico en la ciudad de Valdivia"
. ''Gestion Turistica'',

UACh UACH may refer to: *Austral University of Chile Austral University of Chile ( es, Universidad Austral de Chile or UACh) is a Chilean research university based primarily in Valdivia, with a satellite campus in Puerto Montt. Founded on September 7, ...

. In addition to this international trade collapsed and state income was reduced to half of its previous value after the start of the

World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

in 1914.Villalobos ''et al''. 1974, p. 649.Salazar & Pinto 2002, pp. 141–142. The

Haber process The Haber process, also called the Haber–Bosch process, is an artificial nitrogen fixation process and is the main industrial procedure for the production of ammonia today. It is named after its inventors, the German chemists Fritz Haber and ...

, first applied on an industrial scale in 1913 and later used as part of Germany's war effort due to its lack of access to Chilean saltpetre, ended Chile's monopoly on nitrate and led to an economic decline in Chile. While saltpetre mining gradually waned in importance

rose, exporting raw materials to a level unprecedented in the history of Chile. By 1929 copper exports had reached the same values as saltpetre exports, and in 1937 the value of copper exports largely surpassed that of saltpetre. In the 1920–1937 period both industries had combined a 70–83% share of the value of Chilean exports. In the 20th century two new economic actors rose to prominence in Chile; the state and capital from the United States. Beginning in 1905 United States-based companies came to develop and control copper mining in Chile. The main companies were;

Anaconda Copper The Anaconda Copper Mining Company, known as the Amalgamated Copper Company between 1899 to 1915, was an American mining company headquartered in Butte, Montana. It was one of the largest trusts of the early 20th century and one of the largest mi ...

in control of

Chuquicamata Chuquicamata ( ; referred to as Chuqui for short) is the largest open pit copper mine in terms of excavated volume in the world. It is located in the north of Chile, just outside Calama, at above sea level. It is northeast of Antofagasta and ...

, Kennecott Copper Corporation in control of

El Teniente El Teniente ("The Lieutenant") is an underground copper mine located in the Chilean Andes, above mean sea level. It is in the commune of Machalí in Cachapoal Province, Libertador General Bernardo O'Higgins Region, near the company town of ...

and Andes Copper in control of Potrerillos.Villalobos ''et al''. 1974, p. 605. Between the 1910s and 1930 United States investments in Chile had a tenfold increase, the bulk of which was directed to mining activities. The increased influence of the United States in Chilean economy did not only manifested itself in copper mining but also in foreign trade. After the

First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

the United States became the prime importer of Chilean

goods In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not ...

and in the 1930s it overtook the United Kingdom's place as the prime source of Chilean imports.

Edwin W. Kemmerer Edwin Walter Kemmerer (June 29, 1875 – December 16, 1945) was an American economist, who became famous as an economic adviser to foreign governments in many countries (Philippines, Mexico, Guatemala, Colombia, Germany, Chile, South Africa, Po ...

, a "Money Doctor", was invited to Chile in 1925 to deal with monetary policy and inflation problems which were considered one of the principal economic problems of Chile at the time.Villalobos ''et al''. 1974, pp. 764–765. The visit by Kemmerer was used to back up monetary policies already outlined by Chileans. These reforms included the creation of a

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a centra ...

, the establishment of a government budget law and general bank law. All these reforms were established by

rule by decree Rule by decree is a style of governance allowing quick, unchallenged promulgation of law by a single person or group. It allows the ruler to make or change laws without legislative approval. While intended to allow rapid responses to a crisis, rule ...

by Arturo Alessandri who had been reestablished in power following a coup d'etat against him in 1924 (where the coup-makers protested among other things against inflation). Gold convertibility was established in 1925. As result of these reforms Chile managed to tame inflation to such degree that the 1920s were the decade with less inflation in the 1890–1980 period. Another concequence of the reforms was an increased easyness by Chile to obtain

loans In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations, etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that de ...

not only in the United States but also in the United Kingdom,

Switzerland ). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...

and

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...

. In the years after the visit of Kemmerer there was a sharp increase in foreign investments. Ollas comunes en 1932

The Great Depression that begun 1929 was felt strongly in Chile from 1930 to 1932. Saltpetre and copper exports collapsed. The World Economic Survey of the

League of Nations The League of Nations (french: link=no, Société des Nations ) was the first worldwide intergovernmental organisation whose principal mission was to maintain world peace. It was founded on 10 January 1920 by the Paris Peace Conference th ...

declared Chile the worst affected nation by the depression. The crisis caused the authoritarian regime of

Carlos Ibáñez del Campo General Carlos Ibáñez del Campo (; 3 November 1877 – 28 April 1960) was a Chilean Army officer and political figure. He served as President twice, first between 1927 and 1931, and then from 1952 to 1958, serving for 10 years in office. ...

to fall in July 1931 followed by a succession of short-lived governments until the election of Arturo Alessandri in December 1932. The economic crisis rose the levels of unemployment and caused a migration of unemployed saltpetre miners from the north to Santiago. Miners constituted around 6% of the active population but made up more than half of the unemployed during the crisis. Numerous

soup kitchen A soup kitchen, food kitchen, or meal center, is a place where food is offered to the hungry usually for free or sometimes at a below-market price (such as via coin donations upon visiting). Frequently located in lower-income neighborhoods, soup ...

s sprang up in Santiago while homeless people begun to dwell in caves in the hills around the city. The state responded to the crisis by gradually raising

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and p ...

s, increasing internal demand and increasing control over the "flux and use" of foreign currency. Quotas and licences were established for imports and the gold convertibility was once again abolished in 1931.Villalobos ''et al''. 1974, pp. 767–768. These policies contributed to an industrial recovery and for the industry to already by 1934 surpass the levels of activity of 1929. In the 1930s the massive industrial growth was spearheaded by the textile industry, but non-metallic mining, chemical industries and machine and transport factories did also expand.Salazar & Pinto 2002, pp. 143–144. Overall industry recovered and expanded faster than the traditional exports in the post depression period. The Great Depression brought initially a period of

deflation In economics, deflation is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Inflation reduces the value of currency over time, but sudden deflatio ...

of Chilean currency followed by inflation in 1931 and 1932. The inflation was brought under control momentarily after 1932 but resurfaced again in 1936. The 1900–1930 period was the one of largest growth of agriculture in the 20th century until the 1980s.Salazar & Pinto 2002, pp. 106–107. Despite of this conditions in for rural workers remained harsh with

Tancredo Pinochet Tancredo Pinochet LeBrun (17 March 1880 – 1957) was a Chilean writer and politician. Biography Son of a remarkable family of teachers, his father was Marcos Fidel Pinochet Espinosa, and his mother, Isabel Le-Brun Reyes, was a remarkable ed ...

denouncing the poor conditions of workers in the

of president

Juan Luis Sanfuentes Juan Luis Sanfuentes Andonaegui (; 27 December 1858 – 16 July 1930) was President of Chile between 1915 and 1920. Sanfuentes was the son of writer and politician Salvador Sanfuentes Torres and Matilde Andonaegui. Orphaned at an early age and ...

during his presidency (1915–1920). Within a dual sector economic model the Chilean

has been characterized as a prime example of a primitive and rural component. McBride, a British who visited Chile in the 1930s, is reported to have been "astounded" to see haciendas with "agricultural methods that reminds of ancient Egypt, Greece or Palestine." The Faculty of Economical Science of the

University of Chile The University of Chile ( es, Universidad de Chile) is a public research university in Santiago, Chile. It was founded on November 19, 1842, and inaugurated on September 17, 1843.

was established in 1937 coinciding with the spread of

Keynesian economics Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output ...

.Villalobos ''et al''. 1974, pp. 762–763.

Internal growth era

Partial industrialization (1938–1958)

Industrialization Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...

became a state policy from 1938 onwards. This policy line became possible after the victory of the

Popular Front A popular front is "any coalition of working-class and middle-class parties", including liberal and social democratic ones, "united for the defense of democratic forms" against "a presumed Fascist assault". More generally, it is "a coalition ...

, a coalition including communists and socialists, in the 1938 elections. The perceived success of the

Soviet economy The economy of the Soviet Union was based on state ownership of the means of production, collective farming, and industrial manufacturing. An administrative-command system managed a distinctive form of central planning. The Soviet economy was ...

, the fast growth of other centralized European economies and the influence of

helped to establish "development inwards" ideas in Chile paving the way for active state involvement in the nation's economy.Salazar & Pinto 2002, pp. 35–45. These tendencies were reinforced in 1948 with the establishment of ECLAC (CEPAL in Spanish) in Santiago and the arrival of

Raúl Prebisch Raúl Prebisch (April 17, 1901April 29, 1986) was an Argentine economist known for his contributions to structuralist economics such as the Prebisch–Singer hypothesis, which formed the basis of economic dependency theory. He became the executi ...

in 1950 as director of it. Chile's "development inwards" policies were part of a regional phenomenon with

Argentina Argentina (), officially the Argentine Republic ( es, link=no, República Argentina), is a country in the southern half of South America. Argentina covers an area of , making it the List of South American countries by area, second-largest ...

Brazil Brazil ( pt, Brasil; ), officially the Federative Republic of Brazil (Portuguese: ), is the largest country in both South America and Latin America. At and with over 217 million people, Brazil is the world's fifth-largest country by area ...

and

Uruguay Uruguay (; ), officially the Oriental Republic of Uruguay ( es, República Oriental del Uruguay), is a country in South America. It shares borders with Argentina to its west and southwest and Brazil to its north and northeast; while bordering ...

applying similar policies. In the aftermath of the disastrous

1939 Chillán earthquake The 1939 Chillán earthquake occurred in south-central Chile on 24 January with a surface wave magnitude of 8.3 and a maximum Mercalli intensity of X (''Extreme''). With a death toll of around 28,000, compared to the 2,231–6,000 (official estima ...

, the government created

CORFO The Production Development Corporation (CORFO, from es, Corporación de Fomento de la Producción de Chile) is a Chilean governmental organization that was founded in 1939 by President Pedro Aguirre Cerda to promote economic growth in Chile. ...

(Spanish acronym for ''Production Development Corporation'') to help in the reconstruction of the country and to industrialize the country, mechanize the agriculture and help mining to develop. To finance CORFO loans were taken by the government, the bulk of the taxes were raised and copper mining in particular got an additional tax. One of the early tasks of CORFO was to "solve the old problem of the

ironwork Ironwork is any weapon, artwork, utensil, or architectural feature made of iron, especially one used for decoration. There are two main types of ironwork: wrought iron and cast iron. While the use of iron dates as far back as 4000BC, it was the ...

s".Villalobos ''et al''. 1974, p. 780–781. In doing so it injected capital and granted loans to the Compañía Electro-Siderúrgica e Industrial de Valdivia, the inheritor to the failed Altos Hornos y Acerías de Corral. In 1947 CORFO begun the construction of a large

steel mill A steel mill or steelworks is an industrial plant for the manufacture of steel. It may be an integrated steel works carrying out all steps of steelmaking from smelting iron ore to rolled product, but may also be a plant where steel semi-fini ...

in Huachipato near Concepción which in 1950 begun operating as

Compañía de Acero del Pacífico The Compañía de Acero del Pacífico, also known by its acronym CAP, is the main iron and steel industry of Chile with its main facilities at Huachipato near the port of Talcahuano in Bío Bío Region. As result of Allende's nationalization ...

. Another division of CORFO engaged in

oil exploration Hydrocarbon exploration (or oil and gas exploration) is the search by petroleum geologists and geophysicists for deposits of hydrocarbons, particularly petroleum and natural gas, in the Earth using petroleum geology. Exploration methods Vis ...

making a breakthrough discovery in northern

in 1945. Extraction began in 1949 and in 1950 the state created ENAP (National Petroleum Company) to deal with oil extraction and prospection. Until 1960 most oil extracted in Chile came from Tierra del Fuego. Industrial activity experienced enormous growth in the 1940s, it expanded at least 6.1% annually in that decade. The industries share of GDP rose from 16.7 to 23.7 in the 1940–1955 period. Starting in 1953 the growth rate of Chilean economy decreased to an annual average of 0.7% but increased to an annual average of 2.4–3.0% in the 1957–1960 period. The decline in the economic growth from 1953 onwards was variously attributed to excessive state intervention, neglect of agriculture and mining, unequal wealth distribution and dependency on state intervention.Salazar & Pinto 2002, p. 145. The agrarian production in Chile contracted from 1950 onwards. A government plan set up in 1954 to address this ended with meager results and in 1958 a new plan was presented.

Structural reforms (1958–1970)

The 1958 agriculture plan allowed

to develop investments in dairy plants,

refrigerated The term refrigeration refers to the process of removing heat from an enclosed space or substance for the purpose of lowering the temperature.International Dictionary of Refrigeration, http://dictionary.iifiir.org/search.phpASHRAE Terminology, ht ...

slaughterhouse A slaughterhouse, also called abattoir (), is a facility where animals are slaughtered to provide food. Slaughterhouses supply meat, which then becomes the responsibility of a packaging facility. Slaughterhouses that produce meat that is no ...

sugar refineries A sugar refinery is a refinery which processes raw sugar from cane or beets into white refined sugar. Many cane sugar mills produce raw sugar, which is sugar that still contains molasses, giving it more colour (and impurities) than the white ...

and transport infrastructure.

Statism and collectivism (1970–1973)

Salvador Allende Salvador Guillermo Allende Gossens (, , ; 26 June 1908 – 11 September 1973) was a Chilean physician and socialist politician who served as the 28th president of Chile from 3 November 1970 until his death on 11 September 1973. He was the fir ...

won the 1970 Chilean presidential election as leader of the Unidad Popular ("Popular Unity") coalition. His economic policy included a number of measures referred to as the Vuskovic Plan. Under this the Chilean copper mines were nationalized. Their revenue represent a large share of the Chilean government budget revenue. During 1972, the macroeconomic problems continued to mount. Inflation surpassed 200 percent, and the fiscal deficit surpassed 13 percent of GDP. Domestic credit to the public sector grew at almost 300 percent, and international reserves dipped below US$77 million. Real wages fell 25 percent in 1972.Macroeconomic Stability and Income Inequality in Chile
/ref> At the same time, the United States conducted a campaign to deepen the inflation crisis.

Neoliberal reforms (1973–1990)

From an economic point of view, the era can be divided into two periods. The first, from 1973 to the Crisis of 1982, corresponds to the period when most of the reforms were implemented. The period ended with the international debt crisis and the collapse of the Chilean economy. At that point, unemployment was extremely high, above 20 percent, and a large proportion of the banking sector had become bankrupt. During that first period, an economic policy that emphasized export expansion was implemented. Some economists argue that the economic recovery of the second period, from 1982 to 1990, was due to Pinochet's nationalisation of banks and reintroduction to the private market in 1984.

Monetarist shock therapy and "seven modernizations" (1973–1982)

After the military took over the government in 1973, a period of dramatic economic changes began. The military junta appointed a group of Chilean

economists An economist is a professional and practitioner in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy. Within this field there are ...

who had been educated in the United States at the

University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...

. The

advocated ''

laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...

'',

free-market In economics, a free market is an economic system in which the prices of goods and services are determined by supply and demand expressed by sellers and buyers. Such markets, as modeled, operate without the intervention of government or any ot ...

neoliberal 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 f ...

, and fiscally conservative policies, in stark contrast to the extensive

nationalization Nationalization (nationalisation in British English) is the process of transforming privately-owned assets into public assets by bringing them under the public ownership of a national government or state. Nationalization usually refers to p ...

and centrally-planned economic programs supported by Allende, and the

import substitution industrialization Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production.''A Comprehensive Dictionary of Economics'' p.88, ed. Nelson Brian 2009. It is based on the premise that ...

and

structuralist economics Structuralist economics is an approach to economics that emphasizes the importance of taking into account structural features (typically) when undertaking economic analysis. The approach originated with the work of the Economic Commission for Lati ...

supported by Chilean governments since the

. In a shock therapy, Chile was drastically transformed from an economy with a protected market, with strong government intervention, into a liberalized, world-integrated economy, where market forces were left free to guide most of the economy's decisions. Before 1973 the role of the state was to promote investment and industrialization. The Chicago Boys restricted government intervention and public enterprise activities. Businesses and lands expropriated during the presidency of Allende were re-privatized (with the exception of the copper mines). Price controls were abolished, import liberalized, the financial market and capital flows were deregulated. Labor unions were suppressed. Direct taxes and

progressive tax A progressive tax is a tax in which the tax rate increases as the taxable amount increases.Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), ''Concepts of Taxation'', Dryden Press: Fort Worth, TX The term ''progre ...

es were reduced or abolished while indirect taxes were raised. The central bank raised interest rates from 49.9% to 178%. Thereby inflation could be lowered at the expected price of a sharp recession. When unemployment doubled some public work programmes were installed. Initial support by the business community dried out when contractionary monetary policies and hasty liberalizations caused a drop in manufacturing output of 26% in 1975. The first period advocating a Monetarist shock therapy and “seven Modernisations” is marked by a high rate of business bankruptcies and a significant loss of manufacturing share of GDP. The Chicago Boys argued that this was due to a lack of competitiveness caused by the development strategy supported before 1973. Chilean economist

Ricardo Ffrench-Davis Ricardo Ffrench-Davis (born 27 June 1936) is a Chilean economist. He is Professor of the Department of Economics and the Instituto de Estudios Internacionales at the University of Chile. Along with a few other Chilean students, Ffrench-Davis got ...

counters that the cause for those bankruptcies cannot necessarily be addressed to outright inefficiencies since the severe recessions (around 1973, 1975 and 1981), real interest rates at an average of 38%, hasty import liberalization and an artificially high exchange rate revaluation were the decisive factors of business mortality. After the recession of 1975 the economy expanded from 1977 to 1980 with high growth rates. It made Chile a showcase for Monetarists and

economic liberals Economic liberalism is a political and economic ideology that supports a market economy based on individualism and private property in the means of production. Adam Smith is considered one of the primary initial writers on economic liberalism, ...

Milton Friedman Milton Friedman (; July 31, 1912 – November 16, 2006) 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 ...

called it in his

Newsweek ''Newsweek'' is an American weekly online news magazine co-owned 50 percent each by Dev Pragad, its president and CEO, and Johnathan Davis (businessman), Johnathan Davis, who has no operational role at ''Newsweek''. Founded as a weekly print m ...

column from January 25, 1982 a Miracle of Chile. Nevertheless, the economic growth rate of the whole 1975–1980 period was below the potential Chilean growth rate. The boom ended in the economic crises of 1982. The

Latin American debt crisis The Latin American debt crisis ( es, Crisis de la deuda latinoamericana; pt, Crise da dívida latino-americana) was a financial crisis that originated in the early 1980s (and for some countries starting in the 1970s), often known as ''La Déca ...

had a devastating impact on every Latin American country, but Chile was hit hardest with a GDP declined by 14%, while Latin American GDP diminished by 3.2% within the same period. Besides the

Petrodollar recycling Petrodollar recycling is the international spending or investment of a country's revenues from petroleum exports ("petrodollars"). It generally refers to the phenomenon of major petroleum-exporting states, mainly the OPEC members plus Russia ...

and the

1979 energy crisis The 1979 oil crisis, also known as the 1979 Oil Shock or Second Oil Crisis, was an energy crisis caused by a drop in oil production in the wake of the Iranian Revolution. Although the global oil supply only decreased by approximately four pe ...

there were some specific Chilean reasons for the crises too. The Chicago Boys had expected that since the government had achieved a fiscal surplus and the decision for external borrowing was left to private agents a foreign exchange crises would not occur. But in an effort to fight inflation

Dollarization Currency substitution is the use of a foreign currency in parallel to or instead of a domestic currency. The process is also known as dollarization or euroization when the foreign currency is the dollar or the euro, respectively. Currency subs ...

was introduced which lead to a Peso revaluation that caused high current account deficits which led to an increase in foreign lending. Additionally

capital controls Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measures ...

were abandoned and the financial market deregulated which led to an undamped increase in private foreign borrowing. The debt crises led to a

bank run A bank run or run on the bank occurs when many clients withdraw their money from a bank, because they believe the bank may cease to function in the near future. In other words, it is when, in a fractional-reserve banking system (where banks no ...

which led to an economic crises. With the economic crisis of 1982, the "monetarist experiment" came to be widely regarded as a failure.

Pragmatic neoliberalism (1982–1990)

Finance minister Sergio de Castro rejected a

competitive devaluation Currency war, also known as competitive devaluations, is a condition in international affairs where countries seek to gain a trade advantage over other countries by causing the exchange rate of their currency to fall in relation to other currenci ...

of the Peso even in 1982 despite a quickly growing rate of business bankruptcies. He argued that only the strongest and fittest should survive, but with a deepening financial and economic crises that position became unbearable, he had to resign. One by one the economic crises of 1981 led to the replacement of all the Chicago Boys. Pragmatic economists had to socialize the two biggest Chilean banks in 1982 and another seven collapsing banks in 1983. The Central Bank of Chile socialized much of the foreign debt. The public expenditure quota rose above 34%, even higher than during the presidency of socialist Salvador Allende. The pragmatic Chicago Boy Hernán Büchi was appointed as finance minister in 1985. He revived

Bank regulation Bank regulation is a form of government regulation which subjects banks to certain requirements, restrictions and guidelines, designed to create market transparency between banking institutions and the individuals and corporations with whom th ...

by founding the Superintendencia de Bancos e Instituciones Financieras (SBIF) and established capital controls to avoid another financial crises. He also established ProChile, a Chilean government agency specialized in the promotion of exports.Anil Hira, ''Ideas and Economic Policy in Latin America'', Praeger Publishers, 1998, , p. 87 A further promotion of exports were fostered by cheap government credit and subsidies. Some tariffs were raised up to 35%. The socialized banks and some profitable public companies were re-privatized. The pragmatic economic policy after the crises of 1982 is appreciated for bringing constant economic growth.

Concertación era (1990–2010)

After the return to Democracy the Presidents Patricio Aylwin (1990–1993) and Eduardo Frei Ruiz-Tagle (1994–1999) avoided radical change in favour of a “change in continuity”. To raise the lower income groups the share of government social spending was raised and a tax reform increased fiscal income. In 1990 the labor code was reformed with the aim to legitimate unions in order to balance the bargaining powers of employers and employees. Also in 1990 a

tripartite Tripartite means composed of or split into three parts, or refers to three parties. Specifically, it may also refer to any of the following: * 3 (number) * Tripartite language * Tripartite motto * Tripartite System in British education * Triparti ...

agreement between government, unions and employers provided for an increase in the real minimum wage of 28% until 1993. In the first half of the 1990s a significant success on poverty reduction and a bit more equitable income distribution was achieved. Fish Farm in Fjord near La Junta (3184505625)

Fish Farm in Fjord near La Junta (3184505625)

Capital control Capital controls are residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation's government can use to regulate flows from capital markets into and out of the country's capital account. These measure ...

s such as a reserve requirement for foreign loans and a tax on foreign currency loans helped to prevent another financial crisis when many southern American countries suffered from the impact of the

Tequila crisis The Mexican peso crisis was a currency crisis sparked by the Mexican government's sudden devaluation of the peso against the U.S. dollar in December 1994, which became one of the first international financial crises ignited by capital flight ...

. Nevertheless, the capital controls were not adapted to the disproportionate real appreciation of the peso and excessive capital inflows in 1996–1997. Thus Chile was affected by the

1997 Asian financial crisis The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998– ...

and witnessed a financial and economic crisis, albeit a relatively short one.

, ''Economic Reforms in Chile: From Dictatorship to Democracy'', University of Michigan Press, 2002, , p. 20–21

Notes

References

Bibliography

* * *Otero, Luis (2006). ''La huella del fuego: Historia de los bosques nativos. Poblamiento y cambios en el paisaje del sur de Chile''. Pehuén Editores. . * Salazar, Gabriel (1985). ''Labradores, Peones y Proletarios'' (3rd ed.). LOM Ediciones. . * Salazar, Gabriel; Pinto, Julio (2002). ''Historia contemporánea de Chile III. La economía: mercados empresarios y trabajadores.'' LOM Ediciones. . * Villalobos, Sergio; Silva, Osvaldo; Silva, Fernando; Estelle, Patricio (1974). ''Historia De Chile'' (14th ed.).

Editorial Universitaria Editorial Universitaria is Chilean university press based in Santiago. It was established in 1947 with funds from private people and from the University of Chile. During its existence, it has published the works of generations influential Chilean ...

. . * * *

External links

Economía y democracia. Los casos de Chile y México – by J.L. Saez Lozano,

CEPAL The United Nations Economic Commission for Latin America and the Caribbean, known as ECLAC, UNECLAC or in Spanish and Portuguese CEPAL, is a United Nations regional commission to encourage economic cooperation. ECLAC includes 46 member States (2 ...

Global Trade Watch paper on recent Chilean economic policy history
{{Economic history Economy of Chile

Pre-Hispanic economy

Colonial economy

Spanish conquest (1541–1600)

Century of suet (1600–1687)

Century of wheat (1687–1810)

Independence Era (1810–1830)

Liberalism

Early republican boom (1830–1873)

Saltpetre Republic (1873–1914)

Crisis and restructuring (1914–1938)

Internal growth era

Partial industrialization (1938–1958)

Structural reforms (1958–1970)

Statism and collectivism (1970–1973)

Neoliberal reforms (1973–1990)

Monetarist shock therapy and "seven modernizations" (1973–1982)

Pragmatic neoliberalism (1982–1990)

Concertación era (1990–2010)

See also

Notes

References

Bibliography

External links