The Political Economy of Trade Reform in Emerging Markets

The Political Economy of Trade Reform in Emerging Markets

Crisis or Opportunity?

Edited by Peter Draper, Philip Alves and Razeen Sally

This timely book brings fresh analysis to the important issue of trade policy reform in emerging markets.

Chapter 3: Chile

Sebastián Herreros

Subjects: economics and finance, international economics, political economy, politics and public policy, political economy


Sebastián Herreros1 INTRODUCTION Chile is widely seen today as an example of a country that has successfully liberalized its economy, both internally and externally. In the area of trade policy, this process started with the radical reforms undertaken in the mid-1970s. While the broad thrust of Chilean trade policy shows substantial continuity over the last three decades, there have been significant changes in the relative emphasis of that policy. Between 1973 and 1989 it was based almost exclusively on unilateral opening (along with participation in multilateral negotiations), whereas since 1990 it has evolved towards a ‘multi-track’ approach. The latter combines further unilateral opening with a continued commitment to multilateralism and a growing emphasis on bilateral and regional negotiations. This chapter attempts to explain the evolution of Chilean trade policy since the mid1970s, in the context of a political economy analysis. This will include the economic rationale for the reforms, as well as the role played by foreign policy considerations, international actors, ideology and interest groups. The evolution of other economic policies, especially those affecting foreign investment, is examined as relevant context for the trade policy reforms. The second section briefly reviews Chile’s economic policies during the import-substitution stage. The third and fourth sections examine the trade and complementary reforms implemented during the period of military rule (1973–89) and under democracy (1990 to the present). The fifth section looks at the impact of these reforms on the overall performance of the Chilean economy. The sixth section identifies the main...

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