ECONOMIC ASPECTS OF STATE SOCIALISM IN CHILE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00927A004500060002-7
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 19, 2016
• Sequence Number: 2
• Content Type: REPORT

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2 July 1964
OCI No. 0338/64A
Copy To.
SPECIAL REPORT
ECONOMIC ASPECTS OF STATE SOCIALISM IN CHILE
CENTRAL INTELLIGENCE AGENCY
OFFICE OF CURRENT INTELLIGENCE
SECRET
GROUP I Excluded from automatic
520060 raking and declassification
 Approved For Release 006/12/16: CIA-RDP79-00927AO0450QO60002-7
THIS MATERIAL CONTAINS INFORMATION AFFECT-
ING THE NATIONAL DEFENSE OF THE UNITED STATES
WITHIN THE MEANING OF THE ESPIONAGE LAWS,
TITLE 18, USC, SECTIONS 793 AND 794, THE TRANSMIS-
SION OR REVELATION OF WHICH IN ANY MANNER TO
AN UNAUTHORIZED PERSON IS PROHIBITED BY LAW.
DISSEMINATION CONTROLS
This document MUST NOT BE RELEASED TO FOREIGN
GOVERNMENTS, If marked with specific dissemination
controls in accordance with the provisions of DCID 1/
the document must be handled within the framework of
the limitation so imposed.
Approved For Release 2006/12/16: CIA-RDP79-00927AO04500060002-7
 Approved For Release 2006/12/16: CIA-RDP79-00927A004500060002-7
SECRET
2 July 1964
ECONOMIC ASPECTS OF STATE SOCIALISM IN CHILE
The heavy cost of Chile's inefficient state en-
terprises is one of the country's serious economic
problems. The financial drain has been a factor in
recurring budget deficits and in inflation which has
risen more than 40 percent in each of the past two
years. The prospects for reducing the deficit and
the inflationary spiral would improve if the net loss
from the operations of state enterprises were cut
substantially. However, in an election year with a
pro-Communist candidate as a strong contender, the
government is not likely to consider--much less im-
plement--any required long-range corrective meas-
ures. These would include more efficient management
of state enterprises free from political pressures,
elimination of surplus employees, closer control of
the allocation of investment funds, and a realis-
tic rate policy for goods and services provided by
state agencies. In some instances, a radical re-
duction or liquidation of unprofitable operations
might be essential.
The Growth of State Enterprises
The government's involve-
ment in large-scale economic ac-
tivities dates back to 1939,
when the Corporation for the De-
velopment of Production (CORFO)
was established as the central
agency for economic planning and
development. It still substan-
tially controls the administra-
tion and investment programs of
most of the so-called autonomous
agencies relating to fuels, power,
transportation, and manufactur-
ing.
prises in Chile are government
owned and operated. In addi-
tion the government now either
operates or has substantial money
invested in a number of "mixed"
(government and private) enter-
prises. These include invest-
ment banking, oil and electric
power production, air, rail and
maritime transport, port services,
international and domestic market-
ing, mineral refining and sev-
eral manufacturing fields, such
as the production of steel, chemi-
cals, and fertilizers, and sugar
refining.
The long-range trend has
been toward the gradual expan-
sion and increasing diversity of
state economic activity. Exclud-
ing the copper and nitrate indus-
tries, 8 of the 12 largest enter-
Political Views of Statism
In Chile, as in many of the
larger Latin American countries,
prevailing economic theory and
political sentiment favor a
SECRET
Approved For Release 2006/12/16: CIA-RDP79-00927A004500060002-7
 Approvec,Qr Release 2006/12/16: CIA-RDP79-27A004500060002-7
SELECTED STATE ECONOMIC ENTERPRISES IN CHILE
GOVERNMENT- OWNED
ENTERPRISES'
Corporation for the Development al
Production !CORFOI
Notional Electricity Enterpise,
Inc. (ENDESA)
ACTIVITIES EXTENT Of CONTROL
,lcnni rag, i;nancrn;t of economic Chiles leading economic deveiop-
,,reeisrf.nr.nt; e;tmant caching; twat igenc/; has extensive control
4939. nest lieaxing of new Industries and
~,.;;rein :p-:aloe+; andrei:as ^ -
Fra v.pele , o,IK1 control r
n ,lI p:Vernrnent a,W
_.,.td'Lnntcritieee_
'r,oIfc niil.ty rlectrte power pro-
.tuctia, o.l di=a,;Lutian; est. 1941.
Non. uv rs for over h f%at puo-
lic utility elecnic power generotian,
;m*r? with 48% in 1953; govern-
s .. r..n< ooi.e hos prevented new
.... -l% r.. ,ne uaivute sector.
Operates aL---1 bu.of tool lean:
mltectge in Clone and all of public
rill." ;,.,a I.. w:e Wxsasv :n a nw~sLxr
of cities.
Mornop ly of dotrsestlc routes until
1049; xdxequently, 3 slnoll prf-
._t. _ i lincensed for nan-
..r~N.r ~rvo .calms.
Chilean Port Enterprise (EPCh)
Docking, wrnehouninq and related
pall eer.tce..
National Mining Enterprise (ENAMI)
Copper rhinrrg to smolt producers.
Hu 0x.s .t-:z a .mail troclion of
Chitcne capon, pradectfm.
of the Pacific (( AP)
St
l Cam
wn
Iron and rt-i; :reel irsbricat;on;
Accauntn our over 9Ua ai
ee
p
y