After Pinochet came to power, in order to overcome the serious economic crisis, more than 100 economists were invited to form an advisory group, which was deeply influenced by Chicago School. They studied the Chilean economy carefully. It is believed that after the mid-1960s, Chile's economy slipped to the brink of collapse due to the loss of vitality of the "import substitution" development model and the mistakes of Allende's government's economic policy. It is suggested to adopt the theory of "Chicago School" and implement the export-oriented development model and the free market economic policy of opening to the outside world. At the same time, they offered to invite their mentor, milton friedman, to give lectures to policy makers and industrial and commercial giants in Chile. 1975 In March, Friedman arrived in Chile and was warmly welcomed. In his three-day speech, he briefly described the ways to develop the market economy, that is, privatizing most government subsidiaries, drastically cutting government expenditures, and encouraging foreign trade and foreign capital investment. In order to implement such a major change, Friedman suggested that we should take drastic action immediately instead of dragging our feet. He called it "shock therapy". He admits that this practice will pay a high social price in the short term. Tight monetary policy will reduce demand, increase unemployment and aggravate poverty. However, Friedman predicted that the economy would improve completely and benefit everyone. According to this view, the long-term development problem of Chile can be finally solved. Pinochet believed that Friedman's method was feasible and implemented a series of neo-liberal reform measures accordingly. First, implement the privatization policy. Return all private enterprises and banks owned by Allende government to their original owners, and auction most state-owned enterprises to private individuals; Return the land requisitioned by the previous two governments in the land reform to the original owner or auction. The Chilean government began to vigorously promote the privatization of state-owned enterprises on 1974. 1973, there were 596 state-owned enterprises in Chile. By 1989, 55 1 has been privatized, leaving only 45 strategic enterprises such as copper, oil, tap water and nuclear infrastructure in the hands of the state.

In order to reduce the state's direct intervention in the economy and give full play to the role of the market mechanism, the military government has taken the following measures: First, narrow the scope of state prices and cancel price control. In order to redistribute resources through market prices, improve production efficiency, and enable prices to correctly reflect market trends, Chile has cancelled long-term state subsidies for prices and controlled most prices in the domestic market. Within a month after the military came to power, the prices of more than 3,000 commodities were opened. By 1978, the state has changed from controlling the prices of more than 20,000 commodities to controlling the prices of only 8 commodities. Second, relax the supervision of the financial industry. In view of the fact that most domestic commercial banks and financial markets were controlled by the state during Allende's administration, the military government carried out profound reforms in the financial system in order to establish a liberalized capital market that is not directly interfered by the state and adapt it to the current economic system. Chile's financial system reform is divided into three steps. The first step is to liberalize the interest rate of private financial institutions. 1974, the government issued a decree allowing the establishment of private financial companies to operate deposits and loans, with free interest rates. However, in order to control the business activities of state-owned banks and financial companies, including interest rates and reserve ratio, only the highest interest rate stipulated by law can be implemented. In this case, a large amount of capital has flowed into private financial institutions with high interest rates. The second step is the privatization of banks. From 65438 to 0975, the state began to auction most banks controlled by state-owned production and development companies to private consortia at preferential prices. At the same time, the government abolished the control of bank interest rates and implemented a unified reserve ratio. By the end of 1978, there was only one state-owned bank in Chile. In addition, the original "people's savings" system and the business of credit cooperatives have also been strictly controlled. The third step is to relax the conditions for domestic financial institutions to obtain foreign loans. The reform of Chile's financial system has strengthened the strength of its private financial consortium. They took advantage of the high interest rate of the Chilean bank at that time and made extremely rich profits in financial trade. In addition, the Chilean government has also improved the legal system of the service market, creating conditions for giving full play to the regulatory role of the market mechanism. Second, reduce tariffs. For a long time, Chile is a country with high tariff protection. 1973, the average tariff rate in Chile is 94%, and the highest tariff rate is 500%. 1974, Chile abandoned the 40-year-long high tariff protection policy, drastically reduced tariffs in five and a half years, and completed the tax reform plan. 1June 1979, Chile adopted a uniform tariff of 10% (except for automobiles). At the same time, measures such as preferential exchange rate, import restrictions and import advance payment will be abolished. At this point, Chile has become the country with the lowest tariff in Latin America.

When the military government implemented the tax reform, it set up the value-added tax, increased the direct tax revenue, strengthened the anti-theft and anti-tax evasion measures, and raised the national income. At the same time, a series of measures were taken to reduce fiscal expenditure, resulting in fiscal surplus in some years. In the late 1980s, due to the timely and targeted measures taken by the government, the economy has been rapidly restored and developed, and the national finance has also turned losses into profits. Third, attract foreign investment. 1973 after the military came to power, it promoted a new development model based on trade liberalization and opening up the domestic market, and actively encouraged the development of private enterprises. In this case, Chile took the lead in adjusting its foreign investment policy in Latin America, raising the introduction and utilization of foreign investment to the strategic height of economic development, and greatly relaxing the restrictions on foreign investment from the perspective of nationalism. From 65438 to 0974, the military government promulgated the Foreign Investment Law, namely "Order No.600", which was characterized by an open and non-discriminatory policy towards foreign investment. We will implement a series of preferential policies for foreign investment, give foreign investment more preferential treatment, investment fields and opportunities, and actively attract foreign investment. Later, the foreign investment law was constantly revised, stipulating that foreign capital and domestic capital were treated equally. At the same time, the Foreign Investment Committee was established. 1976 5438+00 In June, Chile withdrew from the Andean Group, making it impossible to implement the Group's "Resolution No.24" on restricting foreign investment. 1977 10 The Chilean government amended the international exchange law, allowing commercial banks to have external liabilities equivalent to 50% of their own assets and reserves, and foreign exchange guaranteed by the state for debt service can be remitted freely.

In the early 1980s, faced with the debt crisis and economic difficulties, the Chilean military government timely adjusted and supplemented its foreign investment policy. 1982, the additional tax levied by foreign capital was reduced from 40% to 33%; In order to reduce the debt burden, 1985 may, the Chilean government promulgated the "19 clause" on the capitalization of foreign debt, encouraging foreign investment and debt reduction through the capitalization of foreign debt. At the same time, the Company Tax Law was revised, and a series of regulations aimed at reducing taxes, facilitating capital repatriation and profit remittance were formulated. Creditors' debts are converted into direct investment through debt capitalization, and they are given preferential treatment to remit profits and withdraw capital. As a result, the amount of debt decreased and foreign investment was absorbed. Since the late 1980s, Chile has become one of the most popular countries in Latin America because of its increasingly stable macroeconomic situation and accelerated economic growth, and has been rated as A-level investment risk by Standard & Poor's Company. Fifth, carry out social reform. The military government issued a labor policy, demanding that trade unions be completely divorced from the party and politics, and dissolved a number of trade union organizations with Marxist tendencies. 1979 1 Promulgate a new labor policy, stipulating that only enterprises are allowed to form trade unions, labor contract negotiations can only be conducted within their own enterprises, and the government has the right to resolve labor disputes through compulsory arbitration; When workers go on strike for more than 60 days, business owners have the right to hire people to replace the striking workers. They also abolished the labor court, allowing employers to dismiss workers at will, and only paid overtime to those who worked continuously for 65,438+02 hours or more. These measures have weakened workers' legal rights.

After the military government came to power, it carried out major reforms to the pension system. 1980 1 1 In June, the military government issued Decree No.3500, which formally designed a new pension system. The system privatizes pension management, capitalizes personal pension, sets up personal accounts, and emphasizes the principles of self-accumulation and self-protection of workers. At the same time, the medical security system has been reformed and the medical security system managed by private institutions has been increased. 1979 to establish a national public medical system, 198 1 to establish a privately managed medical security institution. The security system has provided a relatively complete medical security for many people, improved women's prenatal care, postpartum care and infant care, reduced the infant mortality rate from 8.2% in 1970 to10.5% in 1990, that is, decreased by five times, and extended the life expectancy of adults from the initial 65 years to 7/kloc-. During Pinochet's administration, agriculture developed significantly, especially fisheries and forestry. 1974, the military government promulgated the first forest law, stipulating that natural persons or legal persons should plant trees in barren hills and wasteland, which should be accepted by the state. If they meet the standards, the state will pay 75% of the planting cost and pay it in one lump sum. The state is responsible for providing excellent tree species and providing low-interest loans for afforestation for a period of 15 ~ 20 years; The land tax shall be exempted for the first 25 years of the income from artificial afforestation, and the land tax shall be reduced or exempted by 50% for the forest areas that have entered maturity; Encourage foreign enterprises to invest in the forestry sector; In order to protect the existing forest land, the cut trees must be replanted in time; Vigorously promote exports and introduce foreign varieties. 1980, the government promulgated the Regulations on Rational Development and Protection of Natural Forests, which prohibited the felling of trees in protected areas. Those who cut down natural forests should replant artificial forests of the same area in the same year, and at the same time implement a family tree planting plan. The above measures have made remarkable progress in Chile's forestry, especially in afforestation by individuals and private enterprises, and the export value of forestry in 1989 reached 784 million US dollars. At the same time, it has also played a very important role in restoring and protecting forestry resources and protecting the ecological environment.

During the military government's administration, the fishery developed rapidly. 1980, Chile became the largest fishing country in South America and the fifth in the world, with a total fishery export value of nearly 65,438 billion US dollars. From 65438 to 0979, new machinery and equipment, advanced brewing technology and stainless steel barrels were introduced from abroad, which increased the output and became an internationally recognized wine producing country. Under the guidance of increasing the export of non-traditional products, orchards and vineyards have appeared in large numbers. 1979 issued a decree to allow the sale of land, and the agricultural product processing industry developed rapidly. By the1980s, export agriculture had become the most active and powerful sector in Chile's economy. During the military government's administration, it actively developed national industries and established the Chilean National Copper Company in April 1976. When state-owned enterprises were privatized, the state controlled the production of copper. Since 1982, Chile has become the largest copper producer in the world, accounting for more than 40% of the world copper market and occupying an important position in the international copper mining industry.

The military government has actively developed the oil industry and formulated a number of plans to strengthen the exploration and exploitation of its own oil resources. 1976, strait of magellan petroleum exploration and development plan was implemented; 1979 formulated the exploitation plan of offshore oil resources; 198 1 year, the national oil company began to implement the ten-year plan to accelerate the development of the oil industry by using foreign capital. Therefore, in 1982, the national oil company signed a contract with the American Diamond Exploration Company, and completed the "Pacific Plan" to find oil on the coastal continental shelf of Valparaiso and Concepcion. It also signed contracts with America's Atlantic Tomita Oil Company and Amerida Oil Company to explore oil resources from Chacao Strait to Peraz. With the participation of foreign capital, Chile's oil industry has developed to some extent. The military government's economic reform is strong and involves a wide range. In its implementation, one thing is often considered, and the economic operation has fluctuated several times. In addition, in the early 1980s, Chile was caught in a debt crisis, and the middle and lower classes paid a huge price. Nevertheless, this reform has laid the foundation for Chile's stable economic growth and more effective participation in international competition.