Chilean Model of Economic and Political Changes in Chile and China

Chilean Model of Economic and Political Changes in Chile and China
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Chilean Model of Economic and Political Changes in Chile and China
Chile has had an exceptional economic and political transformation over the years. The country’s improvement has been globally recognized and appreciated by several countries, mainly because of the effective policies that were set up in the country. Nonetheless, it is important to recognize that the nation did not have a smooth economic transformation, especially because some of the reforms implemented by the government had a devastating influence on the nation’s GDP. For instance, the global economic recession that took place in 1982 resulted in a 14.1 percent drop in Chile’s GDP (Takoushian, 2019). Moreover, the nation’s currency increased in value, making it more vulnerable to the global economy. Nonetheless, Chile managed to successfully deal with their crisis and change their economy to one that is more stable and efficient to the extent that figures from the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) acknowledged Chile’s economic growth as the most significant compared to other nations (Takoushian, 2019). The method used by Chile to manage its economy is therefore highly essential since it offers great insights on how to manage the crisis. On the other hand, China has been at the forefront of building relationships with nations in Latin America, most specifically Chile, which has potential markets and natural resources. China’s relation with Chile can be traced back to the mid-1970 when the Cubillos visited China and signed agreements concerning economic relations. The relationship between the two nations has enabled them to grow exponentially over the years, with each party contributing highly to the development of the other. In light of this, this essay seeks to discuss how both countries implemented the Chilean model of political and economic change.
The Switch from Socialist Economy to Market Economy
Chile’s road to political and economic stability was shaped by the complicated history of their revolutionary socialist policies to the adoption of a market economy. In 1970, Chile democratically elected President Salvador Allende, in a crucial moment when the country was undergoing huge economic instability and high inflation. Allende was a well-known figure and envisioned a socialist economy for Chile. Allende enacted socialist policies and increased public spending under the ‘Popular Unity’ coalition (Carrasco, 2018). The most significant of these policies was the drastic increase in housing construction, nationalization of basic industry, and strong protection for worker organization. The socialist policies had huge effects on the economy as workers began to take hold of their working environments. However the United States was against the socialist and communist ideologies, and as a result, it purposed to burden Chile with economic sanctions that ultimately crippled the economy. The sanctions, together with an unwavering economic crisis had huge effects on the country’s GDP, which reduced significantly. Additionally, Chile’s eco...