Commodity Revenue Management: The Case of Chile's Copper Boom

By Alejandra Ruiz-Dana on August 22, 2007
The sixth in a series of seven case studies examining national responses to the commodity price problem, this paper looks at how Chile has addressed price volatility in its copper sector.

Chile's experiences managing its copper resources are often cited as a success, albeit a recent one. However in becoming the world's largest supplier of the metal, Chile has also grown reliant on the revenues it generates. Since this dependence can be harmful to the economy due to the volatility of copper prices, the Chilean government has taken measures to forestall the impacts of a sudden drop in prices. These measure also seek to address future economic downturns.

This study details the steps Chile has taken to lessen its vulnerability to commodity shocks. It begins with a description of the evolution and current state of the copper industry in Chile. The paper then discusses the government's past and present efforts to collect and administer copper earnings, before analyzing the political, economic and social effects such earnings have. It concludes by considering future scenarios that could potentially impact the the current approach taken by the Chilean government and discusses some policy alternatives.

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IISD, 2007