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Challenging Neoliberalism

Globalization and the Economic Miracles in Chile and Taiwan

Cal Clark and Evelyn A. Clark

Neoliberalism, which advocates free markets without government interference, has become increasingly utilized and controversial over the last three and a half decades. This book presents case studies of Chile and Taiwan, two countries that seemingly prospered from adopting neoliberal strategies, and finds that their developmental histories challenge neoliberalism in fundamental ways.
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Index

Globalization and the Economic Miracles in Chile and Taiwan

Cal Clark and Evelyn A. Clark

Allende, Salvador 32, 34, 36, 93, 99100, 106, 113, 139
background of 88
electoral victory of (1970) 30, 88
opposition to 3031
Amsden, Alice 70
Araya, Captain Arturo 89
Aylwin, Patricio 106
administration of 111
Bachelet, Michelle 106
Banco Hipotecario de Chile (BHC) 34
economic policy conference 33
Blake, William 17
business cycle 7, 17, 65
Campaign Assistance Corps 68
capital 8, 15, 18
foreign 24, 30, 567, 667, 101, 110, 126, 137
human 18, 52, 126, 136
markets 31
transportation of 24
capitalism 2, 15, 25, 40
free market 14, 27
Hispanic 82, 1278, 132, 134
raw 18
de Castro, Sergio, Chilean Minister of Economy 33
Catholic University, Santiago, faculty of 31
Cauas, Jorge, Chilean Minister of Finance 33
Chan, Steve
Flexibility, Foresight, and Fortuna (1992) 3
Chang Kai-shek 37, 53
Chen Shui-bian 778
Ch’en Yi 46
Ch’eng Ch’en 37, 48
Governor of Taiwan 48
Chiang Kai-shek 456, 64, 129
death of (1976) 68
Chiang Ching-kuo 68
Chicago Boys 313, 93, 98, 103, 1312
influence in Chilean junta 334, 90, 101, 104, 106, 115, 117, 130, 136
education policies 100
Chile 23, 56, 9, 28, 61, 115, 120, 1267, 130, 137
Central Bank 34, 11415
Congress 889
Constitution of 91
coup d’état (1973) 1, 30, 8990
democratization in 1067, 11213
economy of 2930, 32, 87, 89, 968, 101, 1068, 123
FDI in 96, 108, 11314, 123, 1256
flight of foreign capital from 30
haciendas29
import substitution 2930, 823, 95, 104, 106, 129
inflation rates 34, 36, 112, 11718
financial collapse (1982–3) 134, 136
GDP per capita 36, 88, 935, 99, 103, 108, 113, 123
GFCF of 96
government of 29, 90
income inequality in 10810
industrialization of 83, 85
ISI 83, 858, 1389
international market-opening of (1975–80) 34, 29, 31, 36, 137
privatization efforts 312
shock treatment 324, 11718
tariff reductions 334
manufacturing sector of 945, 136
Navy of 31
Plan Laboral989
political economy of 23, 5, 83
poverty rates in 88
Santiago 31, 83, 86, 100, 113
Valparaiso 83
Chilean Communist Party 87
China, People’s Republic of (PRC) 68, 73, 76, 81, 112
Beijing 73, 76
economy of 734
Fujian Province 74
Shanghai 74
China, Republic of (ROC)(1912–49) 42, 56
Civil War (1927–36/1946–50) 456, 53
China Petroleum Corporation (CPC) 63
Chinese Communist Party (CCP) 45, 48
Christian Democrats 33, 89
members of 106
supporters of 31
Chu, Wan-wen 70
Chun Shui-bian 78
Clark, Cal 75
Flexibility, Foresight, and Fortuna (1992) 3
Communism 134
collapse of 1, 8
Soviet 1
Concertación106, 11112
economic policies of 11314, 1378
Confucianism 59, 1279, 134
conservatism 9, 18
fiscal 43
Corporacion de Fomento de la Produccion de Chile (CORFO)
Concepcion 86, 112
enterprises controlled by 33
establishment of (1939) 85
founding of Pacific Steel Company (1946) 86
Huachipato 86
Coporacion National del Cobre de Chile (CODELCO) 99
Cruzat-Larrain 34
Davis, Ricardo-French 110
Democratic Progressive Party (DPP)
formation of (1986) 68, 77
members of 779
developmental state theory 14, 18
Dicken, Peter,and observations of economic globalization 22
Dickens, Charles
Hard Times (1854) 17
Economic Cooperation Framework Agreement (ECFA) 75
signing of 756
Edwards conglomerate 31
Evans, Peter 18, 139
concept of ‘predatory state’ 1819
Ffrench-Davis, Ricardo 132
First World War (1914–18) 25
foreign direct investment (FDI) 22, 32, 34, 44, 54, 56, 96, 108, 11314, 122, 1256
outward 73, 75
Formosa Plastics 70, 129
personnel of 75
Friedman, Milton 1
Capitalism and Freedom (2001) 8
participation in BHC conference and support for shock treatment 33
students of 31
functionalism 27
Gereffi, Gary 74
Germany 28
GDP per capita 120
manufacturing sector of 27
Third Reich (1933–45) 76
Gerschenkron, Alexander, and theories of industrial development 234
globalization 13, 57, 11, 18, 29, 134, 137, 139
concept of 1011
constraint 24
criticisms of 11, 13, 223
impact on neoliberalism 245
integration 22
role in international product cycle 22
Graham, Otis 27
Great Depression 29, 83, 130
Great Recession (2008–9) 13, 108
Greenhalgh, Susan 59
Greider, William 22
Hacker, Jacob 13
Harvey, David, and observations of neoliberalism 8, 13
von Hayek, Friedrich 15
President of MPS 9
Road to Serfdom, The (1944) 8
students of 31
Heilbroner, Robert 14
Industrial Revolution 15, 18, 136
industrialization 1718, 20, 5960, 132, 136
efforts to stimulate 37, 41
financing of 50
import-substitution (ISI) 83, 858, 134, 1379
institutional economics 25
concept of 257
criticisms of 27
instrumentalism 27
International Monetary Fund (IMF) 8, 32, 104
international product cycle theory 234
concept of 20, 22
role of globalization in 22
International Telephone and Telegraph funding of anti-Allende movement 30
Japan 22, 41, 49, 68, 767
Imperial (1868–1947) 37
manufacturing sector of 51
Jiang Zemin 75
Keynes, John Maynard 136
General Theory of Employment, Interest, and Money, The (1936) 17
Keynesianism 78
Klein, Naomi, and concept of ‘disaster capitalism’ 9
Kuomintang (KMT) 456, 52, 68, 74, 79, 130, 134
use of limited participation 53
White Terror 46, 48, 523, 68
labor 20, 22, 289, 378, 40, 42, 48, 54, 56, 58, 656, 73, 823, 85, 878, 98, 136
costs 22, 58, 72, 76, 134
division of 1416, 40
legislation 85, 989, 113
management 24
market 60, 72
relations 22, 34
rights 24
unions 11, 32, 34, 68, 87
Lagos, Richardo 106
laissez-faire 2, 19, 25, 1389
Lam, Danny
concept of ‘guerrilla capitalism’ 578
Lee Tung-hui 50
Loveman, Brian, and model of ‘Hispanic capitalism’ 823
Ma Ying-jeou 745
Mao Zedong 48
March, James, and definition of institution 25
market economy 26
Marx, Karl 15
Communist Manifesto, The (1848) 17
McLuhan, Marshall 10
Mercantilism, colonial 83
Mirowski, Philip 8
von Mises, Ludwig
Nation, State, and Economy (1983) 8
Mittelman, James 10
Monday Club
Brick Committee 31
formation of (1971) 3031
monetarism 34, 93, 117
monopoly rents 15
Mont Pelerin Society (MPS) 9, 1516
members of 9
Statement of Aims (1947) 10
multinational corporations (MNCs) 10, 56
nationalism 83
Taiwanese 74
nationalization 89
debt 104, 110
neoclassical economics 25
neoliberalism 13, 56, 8, 11, 23, 26, 31, 33, 36, 43, 9091, 934, 98, 103, 11112, 115, 117, 120, 1267, 131, 1367
concept of 79
criticisms of 11, 1314, 19, 24, 56
focus on free market 14, 27
impact of globalization on 245
role of savings and investment in 423
Nixon, Richard, and foreign policy of the Chilean copper embargo 30
Ohmae, Kenichi 10
oil crisis (1973) 7, 6061
Olsen, Johan, and definition of institution 25
Olson, Mancur 19
Organisation for Economic Co-operation and Development (OECD), members of 108
Organization of Petroleum Exporting Countries (OPEC) 64
Panama 30
Pinochet, Augusto 103
regime of 9, 312, 367, 61, 82, 101, 11114, 123, 137
economic policies of 324, 91, 956, 1035, 11011, 113, 130, 1378
rise to power (1973) 1, 8990
Popular Front 85
Prats, General Carlos 89
privatization 31, 100101
of welfare 32
Radical Party (Chile) 85
economic policies of 30
Ratcliff, Richard Earl
Dominant Class of Chile, The (1988) 86
Reagan, Ronald, administration of 89
reductionism 27
Rigger, Shelley
Small Island, Global Powerhouse (2011) 76
Rockefeller, John D. 15
Roy, Ravi 9
Rubinstein, Murray 74
Ruggie, John Gerard, and concept of ‘embedded liberalism’ 78
Ruiz-Tagle, Eduardo Feir 106
Saenz, Orlando, President of SFF 30
Schumpeter, Joseph, and concept of ‘creative destruction’ 20, 139
Scitovsky, Tibor 48
Second World War (1939–45) 11, 16, 22, 42, 45, 50, 123, 130
belligerents of 37
economic impact of 83
Sen, Amartya 13
Development as Freedom137
Silva, Eduardo 36
Sino-American Joint Commission on Rural Reconstruction (JCRR) 49
small- and medium-sized enterprises (SMEs) 42, 54, 57, 59, 656, 723, 129
Smith, Adam 16
Wealth of Nations, The (1776) 1415
paradoxes 1519
wonderful world model 1920
socialism 32, 88, 100, 110
radical 87
Socialist Party in Chile, founding of (1932) 88
Sociedad de Fomento Fabril (SFF), members of 30
Solimano, Andres 90
Stallings, Barbara 90
Standard Oil 15
statist theory, concept of 23
Steger, Manfred 9
Stiglitz, Joseph 13
suites of markets 132, 134
Taiwan 23, 56, 28, 45, 56, 68, 74, 77, 82, 120, 1278, 130
agricultural sector of 4950
diversification of production 49
democratization of 53, 778
corruption issues 789
development model of 79, 81
economy of 29, 367, 59, 646, 6970, 75, 120, 122, 137
FDI in 44, 54, 56, 667, 73, 122
guerrilla capitalism in 578
industrialization of 41, 5960, 136
inflation rates 46, 48, 634, 66, 120
savings/investments rates in 423
Encouragement of Investment statute 38
Export Processing Zones (EPZs) 38
FDI in 56
foreign aid provided to 52, 54
GDP per capita 378, 40, 423, 120, 123
government of 131, 138
household savings rates in 43
Hsinchu Science-Based Park 72
import/export activity of 38, 4041, 656, 756, 1223
income inequality in 60
international market-opening of (1964–72) 3, 29, 36, 137
import substitution 37, 5054, 129
Land to the Tiller program 489, 52, 139
Legislative Yuan 77
manufacturing sector of 412, 61, 63
dispersion of 589
GDP share 122
labor-intensive 42, 66
Ministry of Economic Affairs (MOEA) 129
MNCs in 578
National Assembly 77
Nineteen-Point Program of Economic and Financial Reform 378
political economy of 23, 5
September 28 Incident (1947) 456
SMEs in 54, 57, 59, 656, 723, 129
dispersion of 5960
standard of living in 60, 122
diets 60, 67
Taipei 73, 76
Ten Major Development Projects 65
Taiwan Power Company 63
Taiwan Semiconductor Manufacturing Corporation 77
Taiwan Strait 73, 75
Thatcher, Margaret, administration of 89
transnational corporations (TNCs) 24
Unidad Popular Party
members of 30, 88
opposition to 3031
United Kingdom 89, 16, 25, 278, 136
City of London 27
rentier class of 28
United Nations 68
Economic Commission on Latin America (ECLA) 37
United States of America 810, 25, 27, 30, 37, 4041, 65, 767, 103
bankruptcy laws in 11, 13
economic policies of 7
foreign aid provided by 52, 54, 126
household savings rates in 43
University of Chicago School of Economics 1, 90
faculty of 31
utilitarianism 27
Wang Yung-ching (Y.C. Wang) 75, 12930
Washington Consensus, origins of 2
Winckler, Edwin 678
World Bank 8, 32, 104
World Health Organization (WHO) 50
World Trade Organization (WTO) 32
Zeitlin, Maurice
Dominant Class of Chile, The (1988) 86