More to the Picture than Meets the Eye: On the Ultimate Causes behind the Chilean Economic Transformation1

In the contemporary development discussion on the causes behind the sustained economic growth in Chile since 1985, the predominant canon seldom attach importance to evolving processes taken place prior to the dramatic market oriented shift after 1973. From a long-term development perspective, however, such a view is unsatisfactory and potentially misleading because it tends to disregard the significance of institutional change and the agricultural transformation. Within a framework of longterm institutional change, a reinterpretation of the Chilean economic progress centred on the transformation of the Chilean agriculture is put forward. It is argued that ever since the 1930s a process of social change evolved that helped break down the growth inhibiting traditional institutional order. Specifically, the pressure for modernization, reaching its zenith at the time of the reforms of the latter half of the 1960s, broke elitist economic and political relations and led to agricultural transformation that portended and conditioned the effect of the shift to the market oriented regime of the 1970s and 1980s.