Chile has become the Latin American country that the business press and economists love to extol. In this work, John Kline, administrator of a program in business diplomacy at Georgetown University, examines the rules for foreign investment that were established during the military dictatorship of Augusto Pinochet, their consequences for a wide range of business sectors, and the modifications that have accrued since elective government was restored in 1990. After an introductory chapter on the 1960s and 1970s, Kline provides details on law and business decisions in the 1980s that will make this a valuable work for many years to come.
Drawing on contemporary monographs, the Chilean business press, and interviews with managers of foreign corporations, Kline gives an excellent synopsis of Chilean law and the foreign investment boom, then discusses the role of multinational corporations in such key sectors as minerals, energy, nontraditional exports, finance, and electronics. Along the way, he compares how corporations in the same sector reacted to common situations; for example, the behavior of U. S. banks toward Chile’s debt crisis. He also demonstrates that while the government cut regulation, it enforced those rules it retained. “Chile’s recent experience with foreign investment,” Kline concludes, “thus offers little support for concerns over past criticisms about foreign investor actions” (p. 255).
Kline’s work leaves a number of impressions. Multinational capital has helped Chile diversify exports, develop new management skills, and acquire new technology. The new sources of capital range from Australia and New Zealand to Japan and the United States. Multinational corporate mergers and leveraged buyouts have had a volatile impact on Chile as projects begun under one management have been inherited by others. Government rules on investment and debt-equity swaps have played a major role in corporate decision making—on this last issue, the book really has no equal. Finally, the elected Aylwin government has provided even more liberal terms for foreign investment than did the Pinochet dictatorship.
The book offers far too little discussion of labor and the environment, and not everyone will agree that MNCs are as beneficent as Kline believes they are. Outside political pressures are little mentioned in the shaping of Chile’s internal policies. The work could have been strengthened by a few tables and graphs relating changes over time among particular sectors and in wages and profits. The most glaring omission is a convincing portrait of Chile’s balance of payments. By failing to address these larger issues, Kline reduces the value of his own research. Still, this is a significant addition to any discussion of foreign capital in Chile.
