Chilean 1982 Crisis

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Chile before the Crisis In order to understand the crisis of Chile in 1982, we have to take a look at the various political actions that led to it. After World War II, the economy of Chile was under a lot of protection. The socialist government of Salvador Allende maintained the policies adopted by its predecessor, Eduardo Frei Montalva, which included the nationalization of the copper industry, and agricultural reforms. Under the ISI (Industrialización mediante Sustitución de Importaciones) Model, the economic activity in Chile was mainly controlled by the central government. This model – adopted by many Latin American countries after WWII – consisted in the substitution of imported goods by the creation of similar domestically produced goods. Such policy resulted in very high import tariffs and the restriction of capital inflows from foreign investors. Although the economy of Chile was virtually isolated, President Frei’s administration was able to get stable macroeconomic figures. However, during Allende’s rule (1970-1973) this isolation could not be sustained. Allende´s goal of the socialization of Chile accelerated the nationalization of the copper industry and the agricultural reforms previously started by Frei Montalva. Also, under Allende, the central government took control over the bigger industries and banks. This lack of success under Allende’s administration was also a result of the intensification of the opposition’s acts against his policies, which later resulted in his overthrowing in 1973. The Coup d’état in Chile in 1973 was led by Salvador Allende´s Commander in Chief, Augusto Pinochet. This movement, which involved the armed forces of Chile and the Carabineros – the police forces of the country – was also influenced by the democratic party Partido Nacional Democracia Cristiana. The movement was intended to end the political,

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