The Allende Governance A New Governance

1360 Words Nov 8th, 2016 6 Pages
After the fall of the Allende governance a new governance was applied which led to rise of free market economy through the use of different reforms like privatization and deregulation. With low level of understanding in economics Pinochet hired economists who were tasked with freeing the economy from the previous destruction caused by socialists. According to De Haan by 1970 Chile recorded least freedom in its economy (De Haan et al 220). But later the economy started experiencing major growth from 1980s which increased economic growth from7.2 percent compared to other countries in South America.
While the country economic progress has received international recognition, their development hasn’t been easy as it has faced major critical moments to their economic success. For example during the 1982 recession the gross domestic product dropped by 14.1 % which resulted to overvaluation of their currency which made the currency more vulnerable to harsh changes in international economy. This changes led to decrease in capital which decreased availability of finance meant to finance investments. According to Buchi this led to an increase in unemployment by 23% and decrease in salaries and wages by over 10% (Buchi 10). Years later Chile has been able to experience economic growth especially in the 1980s compared with other countries in South America who underwent similar crises.
This success has been achieved through the application of crisis management process which had affected…
Open Document