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Difficulty: MediumEconomics in the Global Age

"Beginning in the mid-1970s, our economic policy underwent a revolutionary shift. We dismantled the protective barriers of the past, privatized dozens of state-owned banks and corporations, and opened our domestic markets to foreign investment and competition. By embracing the principles of the free market, we sought to integrate our national economy into the global financial system, moving away from state-directed industrialization."

—Excerpt from a report by a Chilean government economic advisor, 1981

The economic policies described in the passage are most representative of which of the following global developments in the late twentieth century?

  1. A
    The resurgence of mercantilist trade strategies aimed at accumulating gold and silver bullion
  2. The spread of neoliberal policies that favored deregulation and free-market reformsAnswer
  3. C
    The establishment of direct colonial rule by Western powers to control foreign markets
  4. D
    The global adoption of Marxist principles to nationalize key industrial sectors

Answer

The spread of neoliberal policies that favored deregulation and free-market reforms
The correct answer is correct because the Chilean policies of privatization, reducing tariff barriers, and promoting free market principles are classic examples of neoliberal economic policies. In the late twentieth century, governments around the world (such as those of Margaret Thatcher in Great Britain, Ronald Reagan in the United States, and Deng Xiaoping in China) increasingly adopted free-market economic policies and promoted global economic integration.

Step-by-Step Solution

1
Analyze the stimulus for key economic descriptions.
The text mentions dismantling protective barriers, privatizing state-owned enterprises, opening domestic markets to foreign investment, and embracing free-market principles.
Understanding the specific economic policies described is necessary to place them in their broader historical context.
2
Identify the global historical context of these policies during the late twentieth century.
These practices match neoliberal economic theories, which promoted free-market capitalism, privatization, and deregulation, and were widely adopted in many parts of the world after the 1970s.
Connecting the specific Chilean context to global trends helps identify the correct historical development.
3
Evaluate the options to find the one that matches this global trend.
The option concerning the spread of neoliberal policies correctly identifies this trend. Other options confuse these reforms with colonial rule, Marxist state control, or early modern mercantilism.
Selecting the option that aligns with the global trend of neoliberalism provides the correct answer.

Key Concept

Neoliberalism and the spread of free-market economics in the late twentieth century
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Topics

Economics in the Global Age

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