In the past few years, perhaps because of the Alliance for Progress’ ten year plans, much attention has been focused on the general economic problems of Latin America. Recent monographs have dealt with assorted problems of the Argentine, Brazilian, Chilean, Peruvian, and Uruguayan economies. These countries, especially Argentina and Chile, apparently make available a wide range of statistical information through the local corporación de fomento or semiofficial development corporation. Two members of the Yale Economics faculty, Markos Mamalakis and Clark Winton Reynolds, both holders of doctorates from the University of California, have prepared two comprehensive studies on special aspects of the Chilean economy, published by the Economic Growth Center of the Yale Department of Economics, under the title Essays on the Chilean Economy. Professor Mamalakis’ study, “Public Policy and Sectoral Development: a Case Study of Chile 1940-1958,” is the more technical, involving considerable mathematical speculation. Professor Reynolds’, “Development Problems of an Export Economy: the Case of Chile and Copper,” also is a detailed and technical study, but the author tends to lean more on the historical approach for the period 1906-1959. The authors have followed the theoretical approach but with extensive statistical verification, much of it concentrated in a thirty-five-page statistical appendix with numerous footnotes. In addition there are eighty English and Spanish language items in the selected bibliography. In setting up the numerous statistical tests on which these studies rest, the authors have made extensive use of data from COREO, the Chilean Development Corporation.
Both authors seem to regard the expansion of Chile’s export potential as the key to greater economic stabilization. Discussing industrial consumer goods production, “the dominant sector,” Mamalakis theorizes that “in Chile … which produces an insignificant amount of producers’ durables, the total value of exports …, in conjunction with the irreducible needs for raw materials, fuels, and consumer goods, determines the maximum potential level of producers’ durables imports” (p. 78). He approves increasing exports to bring in foreign exchange rather than international borrowing or inflation as a means of raising investment in machinery and equipment. Any results of this policy, however, will be visible only in the long run. He opposes more borrowing on the international money market as this becomes increasingly expensive because of the inflation that has plagued Chile in recent years. The general stagnation in agriculture, a low return producer, he asserts, is “partially the apparent cause of a slow increase in per capita income …” (p. 148). Because of inflation, Mamalakis sees a general flight of capital into housing but not into machinery and equipment, as there is not sufficient per capita income to warrant production of capital goods.
In discussing the troubles of the copper industry, chiefly in the foreign export area, Reynolds declares that there has been a “wholesale application of arbitrary participation [by the government] in the earnings of the export industry” (p. 316). The increase in copper taxes has far outstripped tax increases in other parts of the economy, and thus, if copper receipts fluctuate widely, so will tax receipts and this will “further destabilize government expenditures” (p. 319). One wonders how much more unsettled is Chile’s copper export picture now with recent hikes in price to 70¢ a pound, a figure which is still under the price charged by African producers. (In 1959 the price averaged 29.6¢.) Also the new arrangements now being reached between the foreign mineowners and the Chilean government may well alter the entire taxation and ownership situation.
Although highly technical in approach, these two statistical studies of vital aspects of the Chilean economy are required reading for anyone wishing to comprehend the causes of the instability plaguing the local economy in the second quarter of the present century.
