ABSTRACT

International development and financial institutions have conferred lavish praises on the Aylwin government’s handling of the economy during the two-year “transition to democracy.” Indeed, viewed from the angle of traditional macroeconomic indicators, the Aylwin government’s management of the economy during the period 1990–1991 can claim significant achievements: GDP grew at the rate of 2.1 percent in 1990 and 6.0 percent in 1991 while inflation decelerated from an annual rate of 27.3 to 18.7 percent during these two years. Exports continued expanding, reaching US$8.9 billion in 1991, and, as can be gathered from Table 8.1, international reserves attained record levels. Social programs marginally helped improve the distribution of income, and though results so far have been limited, the rhetoric surrounding the new programs, which “integrate the poor to development,” remains impressive. According to official figures, unemployment declined to 6.5 percent at the end of 1991, while, as shown in Table 8.2, real wages grew, though at rates below increases in productivity. Rates of profits showed a rising tendency as Chile entered its second year under civilian rule. According to the Santiago Stock Exchange, the 1991 rate of profits before taxes for 109 of the largest enterprises surpassed the previous rates of 31.8 percent in 1989 and 27.6 percent in 1990. During 1991, this upward tendency was maintained: Earnings rose from 28.2 percent during the first quarter of 1991 to 29.5 percent during the second, reaching 33.6 percent in the third. 1