Chile: A Successful Story in Latin America?

Abstract

By the time the center-left coalition finished its two-decade rule in 2010, Chile had become the envy of South America as it made the transition, planned and implemented by the military regime in 1990, progressed AQ1 steadily to a stable democracy. One key contributor to Chile's stable transition was the change of its economy from an "authoritarian liberal exclusive model" to a "democratic liberal inclusive model" (Angell 1993).After the return to democracy in 1990, the government continued many components of the economic development model based on liberalization, privatization, and deregulation, and a tight fiscal discipline, while increased social spending was accompanied by tax increases. The average annual GDP growth of 2.4% during the 16-year Pinochet regime rose to 5.8% on average in 1990-2007; inflation dropped from an average of 27% under the dictatorship to 3% by 2005, and remained at that level; real wages stagnated during the dictatorship but doubled in the following decade; and the unemployment rate had fallen to 5%. In 2010, Chile became a member of OECD, and was considered by the IMF and