ABSTRACT
This chapter reviews the extensive policy reforms of Chile and Argentina in the 1970s and discusses the associated difficulties in light of the more successful reform experiences of Taiwan and South Korea in the early 1960s. It also reviews the divergence in export growth between Chile and Argentina on the one hand, and Taiwan and South Korea on the other, during the decades before the first oil shock and the associated disparity in macro-economic performance between them. The chapter discusses both the initial similarity in the four countries’ growth patterns and incentive systems in the early 1950s and the differences in the subsequent policy reforms instituted by the two East Asian countries and the two Latin American countries, respectively. It examines the divergence in the control of inflation and a manufacturing unit labor cost in Chile and Argentina compared to Taiwan and South Korea, and discusses the major factors underlying the disparate movements of wages and productivity.
