Economic liberalization can reshape a country’s economy, but measuring its long-term effects is difficult. Chile provides a prominent example. Beginning in the 1970s, a group of Chilean economists trained at the University of Chicago entered the government. Known as the Chicago Boys, they helped introduce extensive market-oriented reforms, and Chile subsequently experienced substantial economic growth. However, it was unclear how much of that improvement stemmed from these policies.

Our research examines how the reforms affected Chile’s real gross domestic product (GDP) per capita. We compared Chile’s economic performance with an estimate of how its economy might have developed without the reforms. Our central estimate suggests that by 2019 real GDP per capita was approximately $4,012 higher than it would otherwise have been, a gain of about 41 percent relative to the estimated alternative.

The Chicago Boys emerged from an educational partnership established in 1956 between the University of Chicago and the Catholic University of Chile. Chilean students received graduate training in economics in Chicago and returned to academic positions in Chile. Although the program initially aimed to strengthen economics education and research, some of its participants later assumed influential government roles.

The rise of the Chicago Boys occurred during a period of political upheaval and economic instability. Following the 1973 military coup, Augusto Pinochet’s government initially retained extensive state direction of the economy. Beginning in late 1975, economists associated with the Chicago Boys entered policymaking positions. Early reforms focused on international trade and foreign exchange, while subsequent changes extended to state-owned enterprises, price controls, labor markets, education, pensions, and health care.

Because these changes unfolded over several years, identifying a single starting date is challenging. We examined alternative dates corresponding to the military coup in 1973, the early reform period in 1976, and the broader transformation by 1982. Across these comparisons, Chile’s sustained improvement relative to its estimated alternative emerges after 1982. We therefore used 1982 as the principal dividing point in our analysis.

To estimate what might have happened without the reforms, we constructed a comparison economy from a weighted combination of other countries. We selected the combination to resemble Chile’s economic and political characteristics before 1982, using information on GDP per capita, life expectancy, population, inflation, foreign investment, agriculture, and democratic institutions. This approach provides a benchmark against which to assess Chile’s subsequent performance.

The resulting comparison combines Brazil, Nicaragua, Peru, the Philippines, and Uruguay, with the largest weights assigned to the Philippines and Uruguay. Before 1982, its GDP per capita closely tracks Chile’s. Afterward, the two economies increasingly diverge, with Chile achieving substantially higher output per person. By 2019, the estimated gap reaches approximately $4,012 per person, or 41 percent above the comparison economy’s level.

We also investigated whether similarly large differences appear when the same procedure is applied to other countries. For each comparison country, we constructed an alternative economic trajectory and examined whether a comparable gap emerges after 1982. Chile’s performance becomes unusual relative to these comparisons by the mid-1990s. These exercises support the interpretation that its subsequent growth was more than a typical fluctuation, although they do not eliminate every possible alternative explanation.

An important question is whether the gains reflect the outcomes of economic liberalization or the military dictatorship itself. To examine this distinction, we separately analyzed the years from the 1973 coup through 1981. In this comparison, Chile performs worse than its estimated alternative. By 1981, GDP per capita is approximately $1,029 lower, a shortfall of 17.3 percent. The largest proportional shortfall occurs in 1976, after which the gap begins to narrow.

These results suggest that the dictatorship’s establishment alone does not explain Chile’s later economic success. The sustained gains emerged later, alongside the broader market-oriented transformation. The reforms also outlasted military rule: Elected governments maintained much of the economic framework after Chile returned to democracy.

Several limitations qualify the findings. First, the analysis evaluates a broad package of changes and cannot identify the separate contributions of privatization, trade liberalization, education reform, or other policies. Second, while the comparison economy matches some aspects of Chile’s earlier experience, it still differs notably in inflation, population, and agriculture. Third, the length of the period we examined leaves room for other developments to influence the estimated gap. Fourth, GDP per capita measures average economic output and does not establish how gains were distributed or capture the dictatorship’s political repression and human costs.

Overall, our findings suggest that the market-oriented reforms associated with the Chicago Boys contributed substantially to Chile’s long-term economic growth. They also underscore the importance of distinguishing economic policy from political regime: The evidence points to gains associated with liberalization, rather than demonstrating that the authoritarian government was necessary for economic success.

Note
This research brief is based on Bryan C. McCannon and Bira Zhahadai, “Chicago Boys,” Eastern Economic Journal 52 (June 2026): 515–27.