1Successes and Failures in Real Convergence: The Case of Chile*

Between 1985 and 1997, Chile grew by a steady 7.3 percent per year, making it the period of highest economic growth ever. Also, during this time the country was one of the fastest-growing emerging market economies. And Chile is now among the few Latin American countries that have grown steadily in the aftermath of the Asian crisis –after a short recession in 1999–, albeit at a slower pace than before the crisis, a result that can be blamed on the global slowdown. This favorable result is partly due to the major overhaul of the economy that has taken place in the past thirty years. The combination of policy reforms and institutional buildup over the past three decades, set the basis for the country’s rapid growth up to 1997, and supported the quick adjustment and recovery after the 1999 recession. This paper reviews the Chilean experience in terms of both macroeconomic performance and policy and institutional reforms introduced in the past thirty years. The aim is to draw some lessons on what worked and what didn’t, so that the Chilean experience can be of help for other countries to accomplish similar results. I