Abstract
This paper analyzes the economic reforms in Argentina under President Javier Milei, drawing comparisons with Chile’s free-market transformations of the 1970s and 1980s implemented by the Chicago Boys. Using Hazlitt’s principle of evaluating long-term and widespread consequences, the analysis integrates Austrian economics concepts: time-preference rates (Hoppe), the role of institutions (Hayek), and capital structure (Mises).
Chile’s reforms succeeded under a dictatorship, which reduced political resistance, stabilized institutions, and enabled long-term policy implementation. In contrast, Argentina’s democratic framework inherently creates high time preferences, institutional fragility, and political volatility, which hinder sustained reform. While Milei’s policies—fiscal austerity, deregulation, and privatizations—aim to address structural issues, the democratic context prevents definitive solutions, limiting reforms to mitigating immediate problems rather than resolving them entirely.
Despite similarities in pre-reform conditions—chronic inflation, distorted capital structures, and state intervention—Argentina’s institutional and political challenges risk undermining reforms’ continuity. Initial results, including reduced inflation and improved economic freedom, reflect a positive direction but remain precarious due to systemic democratic constraints.
The paper concludes that while Argentina’s reforms are aligned with long-term objectives, they face significant obstacles that require cultural and institutional adjustments to ensure durability. Chile’s experience demonstrates the importance of stable institutions and cultural alignment with liberal principles in achieving lasting economic success. Without addressing these underlying challenges, Argentina’s reforms may falter, underscoring the inherent limitations of democratic governance in implementing enduring free-market transformations.
Introduction
Argentina is currently one of the most significant countries due to the substantial economic reforms implemented under the presidency of Javier Milei. These reforms are aligned with free-market and anarcho-capitalist principles (Howden, 2023). Consequently, many have raised questions regarding the feasibility of such radical ideas.
This paper will analyze the potential success of these reforms by comparing Argentina to its neighboring country, Chile. In the 1970s and 1980s, Chile underwent a similar process when the Chicago Boys implemented a profound transformation of its economic structure, guided by free-market principles from the University of Chicago.
For the purpose of comparison, this analysis will incorporate the key lesson from Henry Hazlitt’s Economics in One Lesson. Additionally, it will be complemented by Hans-Hermann Hoppe’s explanation of the time-preference rate (Hoppe, 2001), Friedrich Hayek’s perspective on the role of institutions in economic development (Hayek, 1988; Hayek, 1973) and Mises’s analysis of capital structure and its development (Mises, 1949).
Analytical Framework
As mentioned in the previous section, the analytical framework is based on a central principle: the key lesson from Economics in One Lesson, which states, “The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups” (Hazlitt, 1946, p. 5). Specifically, this analysis will draw on Hazlitt’s applications of this lesson to examine the economic contexts of Chile and Argentina prior to the reforms.
Additionally, to enrich and deepen the analysis, the lesson will be expanded and complemented by three key concepts of Austrian economics: the time-preference rate, the role of institutions in economic development, and capital structure and its development. These concepts are interconnected through their focus on the long-term effects of policies.
The concept of time-preference rate refers to the relative value individuals place on present goods compared to future goods. When the time-preference rate is low, individuals tend to value saving and investment, whereas a high time-preference rate leads to a preference for immediate consumption (Hoppe, 2001). Hoppe extends this concept to political systems, arguing that democracy inherently exhibits a high time-preference rate, primarily due to the electoral cycles and the public identities of government leaders. This drives to a process of decivilization, destroying the capital and savings.
The concept of the role of institutions in economic development is extensively discussed by Hayek in two key works: The Fatal Conceit and Law, Legislation, and Liberty. Hayek argues that institutions are the result of a long process of trial and error, where only those that effectively contribute to the preservation of civilization endure. He emphasizes that institutions cannot be deliberately created or imposed; instead, they must emerge organically and undergo a period of adaptation and stability. This process, and its preservation, is crucial for allowing economic actors to plan and engage in productive economic activity (which lowers the time-preference rate in society and allows civilization to thrive if we connect it to Hoppe’s analysis).
The third concept, Mises’s analysis of capital, draws heavily from Böhm-Bawerk’s work and is primarily articulated in Human Action. Mises asserts that as the capital structure evolves and becomes more intricate, the productivity of the corresponding industry increases. Furthermore, this capital must remain entirely free, allowing its owners to utilize and allocate it as they see fit. The competitive process compels entrepreneurs to innovate, leading to the constant adaptation and restructuring of capital across various industries. Any attempt by the state to interfere and forcefully alter this process would result in calculation errors, as the capital structure is developed by entrepreneurs with the goal of maximizing benefit, thus addressing the consumers’ most urgent needs.
Consequently, any posthumous modifications must be carried out by entrepreneurs, guided by the principles of monetary economic calculation. This process must also be accompanied by the incentive of interest rates, which are determined by the society’s lower time preference, encouraging saving and investment. Furthermore, it will utilize the concept of originary interest, that is basically the time-preference rate of society, to complement Hoppe’s analysis.
These ideas will be used to analyze both the Chilean and Argentine contexts. Through this comparison, it will be possible to identify the factors that contributed to Chile’s success and assess whether Javier Milei can replicate that success.
The Chilean Case
In their work A History of Chile 1808-2018, Simon Collier and William Sater analyze the periods leading up to Augusto Pinochet’s military coup, highlighting a context characterized by massive state interventionism. During this period, industrial development was forced through the Corporación de Fomento de la Producción (CORFO), and most industries were either nationalized or maintained close ties with the government. The political situation was marked by instability, and inflation reached uncontrollable levels. Attempts by governments to address this situation through wage increases only exacerbated inflation.
Since the era of the radicals, Chile had adopted the Import Substitution Industrialization (ISI) Plan, aimed at producing domestically what had previously been imported. Various governments were responsible for developing this ambitious plan for the country’s development, including Pedro Aguirre Cerda, Juan Antonio Ríos, Gabriel González Videla, Jorge Alessandri, Carlos Ibáñez del Campo, Eduardo Frei, and Salvador Allende.
According to Collier and Sater:
Inflation, as we have seen, had by now become a deeply ingrained habit in Chile. Between 1939 and 1942, the money supply almost doubled, wholesale prices soared by 91 percent, and the cost of living rose by 83 percent. These increases can be traced directly to government borrowing from the Central Bank. Four-fifths of these funds went to cover the government’s deficits; the remaining portion was used by agencies like CORFO. This became a pattern: no matter how much revenue the state received, it managed to spend even more, with inevitable inflationary consequences. As the cost of living rose, the Left and Center parties backed legislation to increase wages by 20 percent – as a defense against inflation and (so it was claimed) as a stimulus to consumption and hence industrialization. Unfortunately the wage increases themselves (30 percent in 1941, 36 percent in 1942) exceeded the actual rise in the cost of living, and hence accelerated the inflationary spiral. The government itself virtually institutionalized inflation when in 1941 it created autonomous boards (“Mixed Wage Commissions”) which automatically increased wages to match increases in the cost of living. The government also empowered development corporations (chiefly CORFO) to issue promissory notes, which banks were able to use as collateral to increase their lending. Between 1939 and 1941, for example, loans to the general public rose by 15 percent annually. (Collier & Sater, 2023, p. 293)
This analysis reveals how the policies adopted to control inflation were not only ineffective but contributed to perpetuating a cycle of inflation and unemployment.
The following years did not attempt to reverse this trend. There were attempts by Alessandri and Ibáñez to combat inflation; however, they were insufficient due to the high political cost of adopting liberal measures. Afterward, the ideological stance was openly socialist. Frei’s “Revolution in Freedom” and Allende’s “Democratic Socialism” led to the economic ruin of the country. By the end of Allende’s government, Chile had practically become a socialist country.
Economist Víctor Espinosa analyzes Allende’s government and explains that the economic plan was carried out in three main stages: “The expropriation, inflation, and rationing stages” (Espinosa, 2021, p. 101).
Regarding the first point, the most emblematic case of nationalization was that of copper, a project framed within a law approved in 1971. This was also extended to other industries such as nitrate, iron, and coal. At the same time, the Agrarian Reform, which had begun in previous governments, continued during Allende’s administration, expropriating all or the majority of agricultural lands, transferring them to state management. The article notes that “these expropriations produced capital losses close to ‘130% of Chile’s GDP in 1973’ (Larrain & Meller, 1990, p. 329)” (Espinosa, 2021, p. 102). Following this, Chile’s banking and financial system were nationalized, and many companies were brought under state control.
These and other expansive monetary reforms, designed to cover excessive expenditures, including costly social policies, led to an inflationary spiral that peaked in the year following Allende’s government, 1974. According to World Bank statistics, inflation in that year averaged 504.7% (World Bank, 2024).
Finally, the rationing phase was accompanied by a decline in productivity and growth, along with Allende’s rigid stance on not changing monetary policies. GDP growth began to decline in 1972, reaching -5% in 1973 (World Bank, 2024).
The political decisions of the period were similarly unstable. Videla, for example, swore allegiance to the Communist Party in his early years, only to later proscribe it through the Permanent Defense of Democracy Law in 1948.
Applying our analytical framework to the severe political situation of the time, it is possible to observe that, through Hazlitt’s lesson, the leaders did not evaluate the economic policies of their governments from a long-term perspective. The decisions were eminently reactive, driven by the circumstances of the moment, and therefore highly improvised. A clear example of this lack of foresight is the creation of the Corporación de Fomento de la Producción (CORFO), whose initial reforms were implemented in response to an earthquake in 1939, under the justification of rebuilding the country. In this context, the role of the state expanded disproportionately, marking a turning point in state intervention in the economy.
Likewise, the Keynesian ideological framework played a significant role in facilitating this expansion of the state. During this time, there was widespread social acceptance of the idea that the state should play a central role in economic development. In this regard, Hazlitt, in The Failure of the New Economics, dismantled Keynesian ideas, warning about the risks inherent in inflationary policies. In his book Economics in One Lesson, Hazlitt specifically criticized the inflationary measures adopted by governments, showing how these policies only considered the short-term. While monetary expansion generated immediate positive effects by stimulating consumption, it quickly resulted in rising prices and poverty. He also criticized government spending through the broken window fallacy, illustrating how breaking a window might immediately activate the economy but destroy long-term savings.
Instead of addressing the inflation problem structurally, the rulers limited themselves to alleviating its immediate consequences, which ironically only contributed to worsening the problem in the long term. This superficial and short-term approach, characteristic of a politically unvisionary administration, failed to tackle the root causes of inflation and exacerbated its negative effects over time.
If we apply the ideas of Hans-Hermann Hoppe, it is evident that the time preference increased dramatically during this period. Time preference, understood as the tendency of individuals to prefer immediate consumption over saving or long-term investment, increased considerably, largely due to the destabilizing effects of democracy in a crisis context. This phenomenon was triggered by the political and economic earthquake of 1939, which profoundly altered the country’s social and economic structure. As time preference increased, economic decisions became more short-term and, in many cases, anti-liberal and anti-civilizational, resulting in a progressive deterioration of economic conditions. In fact, with each passing year, the economic situation worsened, revealing the consequences of the poor economic decisions made in the past.
The inflationary policies rapidly led to a drastic reduction in the savings rate, stimulating a widespread tendency toward immediate consumption. This process, in turn, had a devastating effect on the capital base, as it limited investment and the formation of productive capital. The increasing political uncertainty, a direct consequence of institutional instability, further intensified time preference, leading to a vicious circle that gradually destroyed the Chilean economy.
Integrating Ludwig von Mises’s analysis, we can understand how state intervention artificially forced capital formation. This economic distortion process generated clear calculation errors, as the signals sent to entrepreneurs were contrary to the market’s natural interest rate. In an environment where industrialization had not progressed freely, it was because consumers’ most urgent needs had not yet been adequately met. The imposition of forced industrialization only disconnected producers from the real preferences of consumers. At the same time, the capital structure became increasingly fragile, as it was not based on competition or genuine savings accumulation but on distorted political decisions. When attempts were made to increase competition by eliminating regulations, following the recommendations of the Klein-Saks mission, this attempt was quickly abandoned because the industry was not prepared to withstand the “harsh breezes of foreign competition” (Collier & Sater, 2023, p. 297).
Furthermore, by preventing genuine economic calculation, new industries were unable to respond effectively to market demands, which was reflected in the high prices of Chilean products compared to those from other countries. The lack of clear and precise price signals prevented entrepreneurs from making rational investment decisions, further aggravating the economic crisis.
Following Friedrich Hayek’s analysis of the impact of institutional changes, we can observe that they profoundly altered the ability of economic actors to plan long-term. The lack of respect for private property and growing institutional instability made economic development impossible. In the copper sector, for example, foreign companies were reluctant to make new investments in Chile unless they had a formal guarantee from the government. Despite their willingness to invest large sums, such as up to 500 million dollars, and build a refinery to produce electrolytic copper, they required the government to freeze taxes for 20 years and commit to respecting the conditions set by the New Deal. This proposal was reasonable in the context of the political uncertainty that prevailed, and as Hayek notes, it is impossible to plan long-term without guarantees of stability and respect for legal and economic conditions. However, “Such a scheme seemed entirely too rigid to many Chileans (not least the Left), who saw it as depriving the state of flexibility in future economic programs” (Collier & Sater, 2023, p. 301) In other words, institutions were so unstable and government commitments so unreliable that even an agreement on tax stability was seen as too rigid and limiting.
Finally, political instability led, influenced by other reasons we will not discuss in detail, to the military coup of Augusto Pinochet in 1970, which restored, albeit with clear implementation errors, private property and brought stability back to the country. I do not intend to judge the non-economic actions of the regime that are irrelevant to this analysis.
Once the power shift had occurred, the implementation of economic reforms began. The initial years resulted in a profound economic recession. In 1975, a shock treatment was adopted, involving drastic measures to stabilize the economy. Simon Collier and William Sater describe that the significant 25% cut in fiscal spending, the increase in interest rates, and the fall of real wages by up to 60% led to a rise in unemployment and a significant decline in productivity. The authors point out that “The predictable result was a deep recession, with unemployment rising to nearly 20 percent (and real wages plummeting down to three-fifths of their 1970 level). By the end of 1975, GDP was down by one-seventh, industrial production by a quarter.” (Collier & Sater, 2023, p. 390). Despite this adverse situation, the reform project continued.
During this process, over 400 companies were privatized, tariffs were drastically reduced, from an average of 105% to a range of 10-35%, depending on the product, and efforts were made to control inflation, which had reached a historic figure of 504.7%, bringing it down to 9.9% by 1982 (World Bank, 2024). Additionally, a fixed exchange rate of 39 pesos per dollar was established, and the Minimum Employment Program (PEM) was created to address rising unemployment. These reforms achieved a relative stabilization of the economy, at least temporarily.
However, in 1982, the economic model faced a new crisis, influenced by both internal and external factors. According to Collier and Sater, on the one hand, the second oil crisis led to an increase in prices and a decreased demand for Chilean exports, exacerbated by the overvaluation of the peso due to the exchange rate, which made Chilean products less competitive. This was compounded by the excessive debt of the Cruzzat-Larrain and Via banks, which collapsed and destroyed the banking system, leading to over 800 bankruptcies in the economy. Furthermore, the rise in interest rates in the United Kingdom and the United States contributed to exacerbating the crisis. This combination of factors resulted in an 11% drop in GDP growth, while unemployment surpassed levels recorded during previous crises. This phenomenon notably aligns with the Austrian analysis of the economic cycle, as the fixed exchange rate had promoted cheap credit in dollars, which encouraged excessive indebtedness in the aforementioned banks, financing unviable investment projects. The manipulation of the dollar’s price did not alert the market to the real situation of the U.S. economy, resulting in a poor allocation of resources and erroneous investments.
The situation began to change when the Minister of Finance, Carlos Büchi, implemented measures that, according to the authors, were notably pragmatic. The government took control of ten banks and financial institutions, liquidating three of them, while the Central Bank of Chile (BCCH) assumed the debt of the intervened financial institutions. Under Büchi’s leadership, the government implemented more rigorous management of both inflation and the exchange rate. Selective measures were also adopted to benefit agriculture and industry, the VAT on domestic production was eliminated, and tariffs on certain imported products were raised. These actions helped restore some economic stability and laid the foundation for long-term recovery.
In parallel, the privatization of the steel and nitrate companies was carried out, while CO- DELCO and ENAP remained under state control. A key aspect of this phase was the significant change in the pension system, shifting from a pay-as-you-go model to one based on individual contributions, with funds managed by the Pension Fund Administrators (AFPs). This change was accompanied by a debt-to-equity conversion process, which contributed to a significant reduction in external debt. Additionally, foreign investment began to increase from 1988, and a labor reform, known as the Piñera law, was implemented, transforming labor relations in the country.
Clearly, the economic situation improved in a short period, thanks to long-term-oriented policies. The time preference, i.e., the inclination toward immediate consumption over saving and investment, decreased due to the replacement of the traditional democratic system and the government gaining legitimacy after coming to power with the backing of the Congress that requested the coup. Although the first economic crisis was entirely predictable, as Collier and Sater note, the failure to eliminate exchange controls revealed that the reform process was not entirely perfect. This omission contributed to an unforeseen economic crisis, which, once it occurred, should have increased time preference. However, this preference stabilized in the following years as both the constitution and the public opinion climate in the country became more favorable to market-oriented policies.
This environment fostered a renewed process of civilization, which facilitated economic recovery. Privatizations, in particular, played a crucial role by allowing genuine economic calculation and an efficient restructuring of the capital base, enabling a more effective response to consumer preferences. Institutional stability also played a determining role by providing economic agents with the necessary confidence to undertake long-term projects. Together, these factors explain the success of the Chilean economic reform model.
The Argentine Case
The Argentine case presents notable similarities to the Chilean situation, particularly regarding the radical periods up to the administration of Salvador Allende. The Kirchnerist governments, from 2003 to 2023, share several characteristics with the Chilean radical governments: massive state intervention, uncontrollable inflation, price and wage controls, and import substitution policies. These dynamics are evident in both contexts. In this analysis, we will summarize the evolution of the Argentine economy up to the arrival of Javier Milei, with the aim of fulfilling the original objective of comparing the situations of both countries and evaluating the long-term prospects of the policies implemented by the new Argentine government.
Claudio Belini and Juan Carlos Korol, in their work Historia económica de la Argentina en los siglos XX y XXI (2020), highlight that the initial situation of Néstor Kirchner’s government was extremely unstable. Argentina was emerging from the crisis of convertibility, facing a severe devaluation of the peso and a deep recession, while it was also engulfed in a political crisis marked by the succession of five presidents in a short period. The Kirchners, upon assuming the executive power, chose to reject the continuation of market-based policies in favor of expansive economic interventions. They implemented expansive monetary policies, increased taxes, raised public spending, elevated the minimum wage, pesified the economy, promoted import substitution, and adopted a stance of disengagement from the recommendations of the International Monetary Fund (IMF). Despite these measures, which initially resulted in a budget surplus, the situation changed starting in 2009.
The authors emphasize that these policies were a complete success. However, considering the credit and money expansion, that claim is hard to believe. It seems that the expansion of credit and inflation created an illusion of prosperity, which was misinterpreted as a successful recovery from the crisis.
By the end of Néstor Kirchner’s administration, inflation began to rise steadily, culminating in an economic crisis in 2008. Despite the global crisis of the same year, which primarily affected the United States, Argentina’s economy was not directly impacted to the same extent due to its relative disconnection from international markets. The 2008 crisis in Argentina was mainly due to the acceleration of inflation, the increase in public spending, and the real depreciation of the exchange rate, in addition to the high taxes imposed on the agricultural sector, which led to conflicts with this sector.
Over the following years, the interventionist cycle persisted. Inflation became a chronic issue, exacerbated by Argentina’s default, which limited access to international credit, while public spending and national debt continued to expand. To address currency issues and encourage the use of the peso, the government implemented the “Cepo cambiario” (currency controls) and fixed an official exchange rate for the dollar. State interventions in industries, through subsidies and price controls, led to domestic companies falling behind and becoming less competitive in international markets. Despite the creation of ministries aimed at promoting production, the results obtained and the trade deficits of Argentine companies clearly indicated that the policies were distorting the economic structure.
The economic situation in Argentina did not improve in the following years, and inflation statistics have continued to rise. According to data from Expansión (2024), inflation reached 211.4% in December 2023. This phenomenon bears striking similarities to the situation in Chile at the end of Allende’s government: short-term economic policies, a high temporal preference inherent in democracy, persistent inflation, constantly changing institutions, and a distorted capital structure due to state intervention.
Following Alberto Fernández’s administration, Javier Milei assumed the presidency with a libertarian and anarcho-capitalist agenda, promising significant structural reforms. Economist Víctor Espinosa and researcher Antonia Pino, in their analysis of Milei’s first year in office, note that the Argentine president implemented a radical fiscal policy, known as the “motosierra fiscal” (fiscal chainsaw), aimed at reducing public spending from 44% of GDP to 32% by the end of his first year, with the goal of reaching 25% by the end of his term. This strategy included decisive measures such as the elimination of 13 ministries, reducing their number from 20 to 8, and restructuring secretariats, which went from 106 to 55, in addition to dissolving unnecessary public institutions. Thousands of political appointees and “ghost” officials, those who received salaries without performing real functions, were also dismissed, and transfers to foundations and social organizations were eliminated (Espinosa & Pino, 2024, p. 6).
In addition to these state-reduction policies, Milei has proposed deregulating the economy through a Decree of Necessity and Urgency (DNU), which includes more than 300 measures, such as the removal of price controls and the privatization of state-owned enterprises. The “Bases Law and Starting Point for the Freedom of Argentinians,” conceived as a legal framework for the reforms, complements these initiatives. These measures have allowed Argentina to rise 61 places in the Heritage Foundation’s Economic Freedom Index, reduce the country’s risk to 720 basis points, and lower monthly inflation from 25.5% to 2.4%. Furthermore, effective control of the exchange rate has been implemented with the aim of eliminating the Cepo (p. 11).
From the perspective of the proposed analysis, it is observed that Milei’s policies are focused on the long term, supported by legal frameworks such as the Bases Law. Inflation is being controlled effectively, and public spending is being reduced, which follows the lessons of Hazlitt’s economic theory. However, Milei’s government faces the structural challenge of the high temporal preference inherent in democracy, which could lead to the softening of some policies, as has already been observed in the partial approval of the Bases Law. Moreover, the lack of substantial support in Congress has forced the president to negotiate and build strategic alliances to implement his ambitious reform program (p. 5). This situation could weaken long-term policies, as well as the risk that future governments may reverse Milei’s reforms.
Institutions remain subject to change and vulnerable to political shifts, which diminishes economic actors’ confidence in making long-term investments in Argentina and complicates the implementation of structural plans. Additionally, there has not been a complete liberation of the capital structure, as public enterprises and regulations that affect competitiveness continue to exist.
In summary, while the reforms implemented by Milei seem to be moving in the right direction, oriented to the long run, the inherent limitations of democracy, and consequently the high temporal preference, prevent the implementation of shock policies like those that occurred in Chile. This situation could slow down or even undo the long-term liberal policies, as happened in democratic Chile during the 2000s.
Conclusion
The application of the proposed framework reveals that both Chile and Argentina exhibit structural similarities in the years leading up to the market reforms implemented in both nations. However, the context in which these reforms were applied is entirely different. In Chile, the reforms were carried out under a dictatorship that both guaranteed and legitimized the economic policies, which reduced time preference and ensured that the policies were oriented toward the long term. Additionally, the dictatorship provided stability to the institutions and allowed the capital structure to remain largely free from interventions. These factors were decisive in the remarkable economic development Chile experienced from the late 20th century onward.
In contrast, in Argentina, under the government of Javier Milei, the reforms are being implemented in a democratic context. While Milei’s policies reflect a long-term vision, the inherent characteristics of democracy, such as the plurality of interests and the alternation of power, create a greater time preference and could lead to discontinuities in the institutions. As a result, the capital structure remains intervened and has not undergone the necessary adjustments to align fully with market demands. These structural challenges could hinder the successful implementation of Milei’s reforms in the long term or even prevent their continuity.
The comparison between both countries provides a solid insight, given the similarities in their pre-reform contexts, and offers clues about the possible long-term outcomes for Argentina. If Javier Milei seeks to replicate Chile’s economic success, he will need to find ways to overcome the aforementioned obstacles, such as constitutional reforms that consolidate the institutional framework and mechanisms that prevent the reversibility of policies in the future. In doing so, he could reduce time preference and ensure institutional continuity. However, these solutions may not be entirely effective, as there are always ways for the state to circumvent the established rules.
Another approach to ensuring the stability of the reforms would be to achieve consensus and popular support for the liberal measures, which could facilitate future presidents continuing and deepening the system, as occurred in Chile after the transition to democracy, for a certain time. This popular support could contribute to reducing time preference and strengthening institutional resilience. However, the cultural sphere should not be overlooked, as the Chilean case illustrates that when national culture opposes liberal ideas, it is only a matter of time before these reforms are reversed. Therefore, to try to achieve lasting transformation, it is also crucial to strengthen the cultural foundations that support economic reforms in the long run.
Even if those measures are implemented, there is always a possibility of reversion. Therefore, it is crucial to remain aware of these risks in order to design effective solutions.
References
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