Frequent, yet uninformed, market timing recommendations by a financial advisory firm generate significant flows for Chilean pension funds. These flows induce substantial changes in the Chilean
Economic sanctions and covert actions from hegemonic states are common tools used to influence other countries. Less is known about non-state actors such as banks and their impact across borders.
Business groups are the predominant organizational structure in modern Chile. This article tests the long-standing hypothesis that the privatization reform implemented by the “Chicago Boys” during the Pinochet regime facilitated the creation of new groups and hence the renovation of the country’s elites. Using new data we find that firms sold during this privatization later became part of new business groups, process aided by an economic crisis that debilitated traditional elites. Moreover, some firms were bought by Pinochet’s allies and were later used as providers of capital within groups. We conclude that privatizations can empower outsiders to replace business elites.