Chile's Economy
The Chicago Boys and Pinochet's Reforms
How Chilean economists trained at the University of Chicago introduced free-market reforms under Pinochet's dictatorship from 1975, and the debate over their legacy.
The Chicago Boys reshaped Chile’s economy.
Background
- Augusto Pinochet seized power in a 1973 coup against Allende.
- Chilean economists trained at the University of Chicago under Milton Friedman and others took key posts.
Reforms
- Privatising state firms.
- Cutting tariffs to a low uniform rate.
- Deregulating markets.
- Controlling inflation.
1982 crisis
A severe banking crisis in 1982 forced a partial rethink and state rescues.
Legacy
- Supporters credit reforms for later growth.
- Critics highlight repression, inequality and the human cost of the dictatorship.
Democracy
After 1990, democratic governments kept markets open but added social spending.
The tariff cut
Chile cut import tariffs from very high levels to a uniform low rate, exposing firms to competition.
Thinking the reforms had no costs
They came with repression and a 1982 crisis.
Key takeaways
- Pinochet took power in 1973.
- Chicago-trained economists liberalised the economy.
- A 1982 banking crisis followed.
- Democracies after 1990 kept markets and added social spending.
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