Economic history of Chile
[11] In the Far North the Pre-Hispanic economy of indigenous groups were divided among those that practised agriculture and were sedentary and the Changos that lived as coastal hunter-gatherers.
Bone necklaces, gold and copper objects interpreted as luxury goods suggest according to Villalobos et al. certain level of social stratification among the sedentary groups.
[12] At the time of the arrival of the first Spaniards to Chile the largest indigenous population concentration was in the area spanning from Itata River to Chiloé Archipelago.
[22] The initial Spanish settlers of Chiloé Archipelago (conquered in 1567[23]) attempted to base their economy on gold extraction and a "hispanic-mediterranean" agricultural model.
[24] The collapse of the Spanish cities in the south following the battle of Curalaba (1598) meant for the Spaniards the loss of both the main gold districts and the largest indigenous labour sources.
[37] Initially Chilean latifundia could not meet the wheat demand due to a labour shortage, so had to incorporate temporal workers in addition to the permanent staff.
[42] In the 18th century the shipbuilding industry in Valdivia, one of the city's main economic activities, reached its peak building numerous ships including frigates.
[43][45] Direct trade with Spain over the Straits of Magellan and Buenos Aires begun first in the 18th century constituting primarily an export route for gold, silver and copper from Chilean mining.
The Guerra a muerte phase was particularly destructive for the Biobío area and ended only to see a period of outlaw banditry (e.g. Pincheira brothers) occur until the late 1820s.
[48] To pay off the loan the Chilean state granted the company Sociedad Portales, Cea y Cía a sales monopoly of tobacco in Chile, but this activity ended in failure.
[50] Chile was officially open to trade to all nations since 1811 but applied protectionist policies to favour domestic production in a manner that has been called neomercantilism.
[55] At the end of the silver rush, rich miners had diversified their assets into banking, agriculture, trade and commerce all over Chile.
[62] This was because Valdivia was since colonial times isolated from Central Chile by hostile Mapuche territory and depended heavily upon seaborne trade with the port of Callao in Peru.
[62][63] Until the mid-19th century more than 80% of Chilean population remained rural working in agriculture or mining and was to a large degree self-sufficient to produce articles of consume.
This situation changed after the Pactos de Mayo were signed in 1902 and the inauguration of the Transandine Railway in 1909, making war unlikely and trade across the Andes easier.
The Argentine winegrowers association, Centro Vitivinícola Nacional, seeing Chilean wines as a threat to domestic industry, protested vigorously against the agreement.
Their complaints, in conjunction with that of Chilean cattle farmers represented by Sociedad Nacional de la Agricultura ended up tearing down the plans for a free trade agreement between Argentina and Chile.
[83] Tierra del Fuego and much of Magallanes Region also experienced a boom in the sheepherding industry since the 1880s accompanied by colonization of the sparsely populated Patagonian grasslands.
[86] The opening of Panama Canal in 1914 caused a severe drop in traffic along Chilean ports due to shifts in the maritime trade routes.
By the end of the First World War, America had become the largest export market for Chilean goods and by the 1930s overtook the UK as Chile's greatest importer.
[97] All these reforms were established by rule by decree by Arturo Alessandri who had been reestablished in power following a coup d'etat against him in 1924, in which the coup-makers protested among other things against inflation.
[98] The crisis caused the authoritarian regime of Carlos Ibáñez del Campo to fall in July 1931 followed by a succession of short-lived governments until the election of Arturo Alessandri in December 1932.
[78] McBride, a British who visited Chile in the 1930s, is reported to have been "astounded" to see haciendas with "agricultural methods that reminds of ancient Egypt, Greece or Palestine.
[113] The 1958 agriculture plan allowed CORFO to develop investments in dairy plants, refrigerated slaughterhouses, sugar refineries and transport infrastructure.
[122] Initial support by the business community dried out when contractionary monetary policies and hasty liberalizations caused a drop in manufacturing output of 26% in 1975.
[123] The first period advocating a Monetarist shock therapy and “seven Modernisations” is marked by a high rate of business bankruptcies and a significant loss of manufacturing share of GDP.
The Chicago Boys had expected that since the government had achieved a fiscal surplus and the decision for external borrowing was left to private agents a foreign exchange crisis would not occur.
But in an effort to fight inflation Dollarization was introduced which lead to a Peso revaluation that caused high current account deficits which led to an increase in foreign lending.
[128][129][130][131] Finance minister Sergio de Castro rejected a competitive devaluation of the Peso even in 1982 despite a quickly growing rate of business bankruptcies.
He revived Bank regulation by founding the Superintendencia de Bancos e Instituciones Financieras (SBIF) and established capital controls to avoid another financial crisis.
