The Deindustrialization of Chile, 1974-1984

Abstract

This paper attempts to contribute an empirical analysis to an economic phenomenon that has had and continues to have major repercussions for the running of the Chilean economy. The phenomenon is that of industrial decline. Between 1974 and 1984, industrial decline has been sufficiently continuous to be described as a process of deindustrialization. According to the data provided in this paper, the decline of Chilean industrial production between 1973 and 1983 was approximately 11 per cent. Decline in employ? ment was of a much greater order. Precise data is difficult to find beyond 1980. Between 1973 and 1980, a reduction in manufacturing employment of 22 per cent occurred; a conservative estimate would put the decline in manufacturing employment between 1973 and 1983 at 33 per cent. Unfortunately, very little empirical work has been done on this extraordinary phenomenon. Most University departments of economics and economic development in Chile have taught and researehed in topics sym? pathetic to the prevailing economic paradigm of monetarism. Within the monetarist framework, the process of industrial decline is seen as necessary. The assumption is made that the decline of the industrial sector occurs because it is unprofitable and uncompetitive in terms of world trade. Unfortunately no research has been conducted into this assumption by the monetarist departments of economics. However, the monetarist paradigm not only prevails in all leading departments of economics. Such is the power of departments of economics within Universities (and particularly the Catholic University) that all departments with interests in economic develop? ment (e.g. regional economic development) have either to teach within a monetarist framework or remove any reference to 'economics' from their courses or research. Thus, and equally disturbing, no other University department has investigated this phenomenon. Research has therefore been restricted to non-University institutions?most notably the Corporacion de Investigaciones Economicas para America Latina (CIEPLAN) and the Academia de Humanismo Cristiana and its Programa de Economia del Trabayo (PET). CIEPLAN's research, however, concentrated on the early reorientation of industry in the mid-1970s,1 and PET's more recent analysis2 omitted to analyse the data provided by the Instituto Nacional de Estadisticas (INE), the National Statistical Office. This is partly because of the delays in the production of industrial data, a reflection of the low priority given to industrial data and the flooding of the computer store-room of the INE in 1981. As a result the 1979 Industrial Census and the Industrial Survey of

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