Economic Reform, Regional Integration, and Democratization in Argentina & Chile
James A. Wood
History Department
North Carolina A&T State University
Thanks to CIEE’s 2005 Internation Faculty Development Seminar, my understanding of contemporary realities in Chile and Argentina has been greatly enhanced. I am grateful for the opportunities provided to me by the program and its financial supporters. My experience in the CIEE program gave me diverse perspectives on the contemporary situation in South America’s Southern Cone. I was encouraged to draw my own conclusions about the region’s development in three main areas: Economy and Trade, Democracy and Human Rights, and Regional Integration and Globalization.
I saw that Chile and Argentina share many common elements in the history of the twentieth century. Both have faced turbulent periods of democratic advance, political radicalization, dictatorial reaction, and redemocratization. Both have had to confront the globalized world economic system and its neoliberal prescriptions. Both have entered into a greatly increased number of regional and global trading agreements. Both have had to find ways to resolve deep, painful wounds left behind by military repression and reconcile historical memories with legal justice. In the area of democracy and human rights I was especially impressed by the consolidated nature of democratic government in both countries, which has allowed for an aggressive approach to the prosecution of human rights violators.
With the help of the experts supplied by CIEE and FLACSO I was also able to see how Chile and Argentina have fared economically in the era of globalization. The biggest, most obvious difference between Chile and Argentina, in fact, has been in the area of economic performance. While Chile has been highly successful (by almost every economic measure) pursuing its diversified export model, Argentina faced the most damaging economic crisis of its history only four short years ago. What explains this massive difference in the neighboring countries’ experiences? While numerous factors could be mentioned, three struck me most powerfully.
First, the economic policy decisions of the Pinochet dictatorship in Chile were different from those of the Argentine junta of the 1970s. While Pinochet implemented the extremely painful privization policies that transformed the foundations of Chile’s economy, the Argentine junta ran up debt and did little to increase economic competitiveness. Indeed, there is a profound debate going on in Chile today about how much credit the dictatorship should get for doing the economic “dirty work” that some see as the basis for the country’s current prosperity.
Second, Chile’s path back to civilian democracy required a broad alliance of political factions. The political consensus that emerged in the struggle to return to democracy in Chile seems to run deeper than in Argentina, where the Falklands/Malvinas War did much to discredit military rule. This consensus has provided Chile’s Concertación governments with more leverage than their civilian Argentine counterparts in negotiating a wide range of successful economic policies—such as capital controls, corporate taxes, and anti-poverty measures—with the leaders of business, labor, and civil society organizations.
Third, Chile and Argentina made vastly different decisions in the 1990s about how to deal with the value of their currencies. While the Chilean peso floated (after being devalued under Pinochet), the Argentine peso was pegged to the US dollar under President Menem. The outcome of dollarization, combined with the influx of international currency speculators, was disastrous for Argentina. It resulted in a massive amount of corruption, government borrowing to cover its currency “fiction,” and eventually brought about the government’s default on its loans, which in turn triggered the 2001-2002 crisis.
I am already scheduled to present these findings to a group of faculty and students on my campus in October. I have also offered to provide a more customized talk about economic policies and models in contemporary South America to the American Economics Association chapter in our School of Business and Economics. In addition, my experience in the CIEE program will enhance all of the courses I teach, especially the Global Studies Capstone Seminar, which is taken by students who have recently returned from a study abroad experience. I now have my own recent international experience to share with them.