The Process of Transformation and the Role of International Cooperation: An Observer’s View

Abstract

The economic programme which contributed to the UP’s electoral victory was based on a prognosis which was widely shared by economists and by most political groups; it identified the problems of the Chilean economy as follows:

• (1) The rate of growth was slow, tending towards stagnation after the negative effects of import substitution became noticeable. It dropped from an annual average of 5.3% during the 1960–66 period to less than 3% during the last part of the 1970s.

• (2) Monopolization was increasing due to both import substitution and the increasing importance of foreign capital. These were interrelated and tended to reinforce each other, and in 1969 20% of the industrial enterprises’ capital was in foreign hands.¹

• (3) The unemployment rate was constant — no less than 6% — while an increasingly large proportion of new jobs — about two thirds — were being created in the tertiary sector, which in 1970 absorbed 47% of the labour force.²

• (4) Incomes were highly concentrated: 79% of the families received 47% of the national income, 90.9% of the families 66.5%, and 2% of the families 12.5%.³

Our primary task is to do away with this constraining structure which only generates a deformed growth. Simultaneously we must build up our economy.

S. Allende

Salvador Allende died not because he was a socialist, but because he was an incompetent.

P.N. Rosenstein-Rodan, ‘Why Allende Failed’, Challenge (May–June 1974)