Crisis of 1982: Difference between revisions

After the socialist reorientation of the economy during the [[presidency of Salvador Allende]], economic sabotage by the [[Richard Nixon|Nixon]] presidency,<ref>{{Cite web|title=Chile and the United States: Declassified Documents Relating to the Military Coup, September 11, 1973|url=https://nsarchive2.gwu.edu/NSAEBB/NSAEBB8/nsaebb8i.htm|access-date=2020-12-15|website=nsarchive2.gwu.edu|quote=President Richard Nixon had ordered the CIA to "make the economy scream" in Chile to "prevent Allende from coming to power or to unseat him,"}}</ref> and the subsequent Chilean economic crisis which reached its zenith during 1973,<ref name=salazar>''Historia contemporánea de Chile III. La economía: mercados empresarios y trabajadores.'' 2002. [[Gabriel Salazar]] and [[Julio Pinto]]. pp. 35–62.</ref>{{rp|35–45}} the Armed Forces following the orders of the military junta and with the support of the United States government madeexecuted a [[1973 Chilean coup d'état|Coupcoup d'état]] and demobilized the forces loyal to Allende like the [[Revolutionary Left Movement (Chile)|Revolutionary Left Movement]]. They closed down the congress, imposed censorship, limited civil rights and arrested thousands of people from leftists to center democrats. Upon taking over power, the military junta under the command of General Pinochet set out to implement a series of neo-liberal economic policies based on the [[Chicago school of economics]]. In 1973, only a little bit over two years of regulatory policies established by Allende, the military junta decided to reform the economy, and the [[Chicago boys]] were permitted to implement some of the neoliberal economical policies outlined in ''[[El ladrillo]]''.<ref name=salazar/>{{rp|49–62}} In 1979 however, Chile decided to depart from the principle of free floating exchange rates, with disastrous results.<ref name="The Political Economy of Unilateral Trade Liberalization">{{cite journal| url=http://www.anderson.ucla.edu/faculty/sebastian.edwards/W6510.pdf | journal=UCLA | title=The Political Economy of Unilateral Trade Liberalization | year=1990 | access-date=2010-12-06}}</ref> From 1976 onwards import [[tariff]]s decreased strongly impacting negatively the Chilean production aimed for the [[Single market|internal market]].<ref name=Leiva1983/>{{rp|26}}

==Boom and burst De Pinochet==

The 1982 crisis has been traced to the overvalued [[Chilean peso]], which had been helped by being pegged to the [[US dollar]], and to the high [[interest rate]]s in Chile, which would have hampered investment in productive activities. In fact, from 1979 to 1982, much{{vague|date=October 2013}} of the spending in Chile was the consumption of goods and services.<ref name=salazar/>{{rp|49–62}} Foreign loans given to Chilean companies started to decline in late 1981 reaching the point of becoming negligible one year later.<ref name=Leiva1983/>{{rp|28}} Events can also be explained in terms of [[Interest rate|interest rates]] and [[capital flows]] using the nineteenth-century Banking School theory of [[Financial crisis|financial crises]].<ref>{{Cite book |last=Read |first=Charles |url=https://www.worldcat.org/oclc/1360456914 |title=Calming the storms : the carry trade, the banking school and British financial crises since 1825 |date=2022 |isbn=978-3-031-11914-9 |location=Cham, Switzerland |pages=286 |oclc=1360456914}}</ref> By 1982, Chile's [[external debt]] had risen to over 17 billion dollars.<ref name=salazar/>{{rp|49–62}} [[Income per capita]] in Chile fell in 1983 to levels below those of 1960.<ref name=Leiva1983>{{Cite journal |title=Evolución de la Crisis Económica |journal=Coyuntura Económica |last=Leiva L. |first=Jorge |volume=10 |pages=3-713–71 |publisher=Academia de Humanismo Cristiano|year=1984 |language=Spanish}}</ref>{{rp|3}} Incomes fell as salaries were not adjusted for [[inflation in Chile|inflation]].<ref name=Leiva1983/>{{rp|4}} Around half a million persons were on [[employment programme]]s.<ref name=Leiva1983/>{{rp|4}}}

The government response to the crisis priorized the preservation of the international markets over the placation of [[Jornadas de Protesta Nacional|internal unrest]].<ref name=Leiva1983/>{{rp|5}}}

[[Category:1982 in economicseconomic history]]