as immutable,
"without taking into account the importance
of the specific conditions in each nation or
region," he says.
Using a simple and lively style, the book provides
a critical but constructive perspective on the
economic policies applied in Chile, backed up
by an abundance of data. The first of the four
sections reviews the country's economic development
from the postwar period to the military government
and the return to democracy in 1990. The second
section is devoted to the neoliberal policies
adopted in the 1970s until the crisis of 1982,
and their consequences for growth, investment
and social equity. The crisis of the 1980s is
examined next, especially the main problems
associated with the foreign debt, which was
the dominant socio-economic variable during
that decade. The fourth section discusses the
inheritance of the military regime and the economic
and social challenges faced by the new democratic
governments.
Ffrench-Davis underlines that during the 1990s
Chile experienced an expansion of productive
capacity unprecedented in its history and, at
the same time, made significant progress in
the struggle against poverty. In 1999, however,
"failings, shortcomings and a lack of further
‘reforms of the reforms'" made their
appearance.
Among his conclusions and proposals to meet
the economic challenges facing the country,
the author discusses how the vigorous 7% average
growth achieved in the 1990s can be repeated
following the adjustment carried out in 1999.
He recognizes that "it is not easy to recover
the exceptional," and suggests some key
ideas, among them the following:
- Recreate a macroeconomic environment suited
for achieving sustainable development, operating
at a level of effective demand close to productive
capacity; actively maintain a competitive
exchange rate; achieve greater stabilization
of interest rates.
- Develop new export activities which add
value to natural resources. Exports are a
determining factor in enhancing growth capacity.
- Persevere with efforts at regional integration,
despite the problems which may arise on the
way, given that negotiated access to the markets
of Latin America is vital for export diversification.
- Safeguard productive sectors that are left
behind by development, such as areas of agriculture
and mining. This requires pragmatic sectoral
and regional policies.
- Savings and domestic investment are also
determining factors. It is important to design
channels by which long-term savings –
such as private pension funds, or AFP –
may be directed towards national companies,
especially SMEs (small and medium-sized enterprises).
The current trend towards encouraging the
flow of AFP savings abroad is an error and
a contradiction.
- Investment in human capital. The educational
reform under way is a great step forward,
but a vast and effective national effort at
labour training is also required.
- Improve the country's very unequal income
distribution. Social expenditure efforts must
be stepped up, the fight against tax evasion
and the regressive loopholes which persist
in the system must be reinforced, and worker
'productivity' assisted.
- The reform of the State should mean the
professionalization of public administration
and improving standards of productivity, public
service and transparency.
This book, published by Dolmen
Ediciones, is on sale in main bookshops in Chile
and through the website www.trolley.cl.
A brief summary of its contents and an interview
with the author are available in Spanish and
English on ECLAC's website, www.eclac.cl
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