Neoliberal Band-Aids for Development: A Comparative Analysis of Chile and Argentina from the 1970s through the 1990

At the end of War World II, numerous European intellectuals committed to finding a new guiding economic theory in response to economic failures of the past. Disagreements about whether governments or markets should drive the world economy have occurred since. However, by the 1970s the Keynesian theory that was once praised with its high government became obsolete after inflation and unemployment spread around the world. The 1970s developed into a significant decade as the theory "neoliberalism" slowly converted to the new guiding principle of economic thought. Neoliberalism, supported by economist Fredrick Hayek and Milton Friedman encouraged a free market economy with no government intervention. While these policies began to show some favorable results in the developed nations, the United States with other international organizations decided that this economic theory would be the answer and the solution to financial problems and developmental shortcomings in Latin America. These structural adjustment recommendations became known the Washington Consensus. It all started with Chile becoming a neoliberal guinea pig in the 70s. By the 80s other Latin American countries also began to adapt these polices as well. However, while some countries like Argentina were eventually pushed to adapt neoliberalism policies, they never fully privatized public goods such as education. This thesis begins by further analyzing and evaluating the neoliberal approach of using the private sector as the engine to development. Then it goes on to compare and contrast Argentina and Chile's implementation of a free market economy from the 1970s until the 1990s. Afterwards, the human development approach is considered as an alternative to counter the theory of development through economic growth. Finally, to evaluate the strengths and weakness of each perspective this thesis looks at whether the neoliberal policy of privatization increased levels of education in Chile, compared to its neighboring country Argentina, which kept education nationalized. While various statistics from these three decades are evaluated throughout this thesis, work by development theorists Amarteya Sen and Mahbub ul Haq who give a great importance to the role of education in human development is also used. For further evidence, the Human Development Reports of Argentina and Chile, developed by the United Nations, are also utilized to look at the progress in education during the past decades.