economic history of Chile

The economy of Chile has shifted substantially over time from the heterogeneous economies of the diverse indigenous peoples to an early husbandry-oriented economy and finally to one of raw material export and a large service sector. Chile's recent economic history (since 1973) has been the focus of an extensive debate from which neoliberalism acquired its modern meaning. Chile emerged into independence as a rural economy on what was the periphery of the Spanish Empire. A period of relative free trade that began with independence in the 1810s brought a modernizing development of certain sectors of the Chilean economy. This was accompanied by formation of a local business class, a novelty in Chile. Chile experienced its first modern economic crisis with the Long depression in the 1870s. The exploitation of lucrative nitrate deposits of the north conquered in the War of the Pacific (1879–1884) marked a whole epoch in the history of Chile and the economic legacy of nitrate has been widely debated. When Chile became an independent nation in 1818 it was the poorest territory in the Americas, by the 1890s it had become richer than Sweden, and twice as rich than Japan and it became one of the 15 richest nations in the world, a position it would retain for decades, even as late as the 1950s it remained richer than its former colonial master, Spain, and almost as rich as Germany. However, starting in the late 1920s, the Chilean economy began a steady decline with 1950 industrial capacity inferior to what it had been forty years previously. It was not until the late 1970s that this decline started to revert. Since that time the Chilean economy has generally grown although it has yet to regain its former status. In the first half of the 20th century Chile suffered severe economic recessions including the Great Depression. This period saw the rapid urbanization of the country, and a state-led partial "industrialization" that began in 1939. Large-scale copper mining replaced nitrate extraction as the country's main source of wealth. Chilean agriculture remained one of the most undeveloped sectors of economy and was stagnant, despite land reforms in the 1960s and 1970s, from 1930 to 1980.