<abstract xmlns="http://www.w3.org/1999/xhtml"><p>The article aims at explaining how a small opened economy can effectively deal with a resource abundance problem. The thesis of the essay is a statement that Chile has been able to cope with the resource “outside” by developing proper institutions and diversifying the structure of its foreign trade. To verify the thesis, a literature review of theoretical recommendations how to utilize resource revenues without harming economy, as well as analyses of chosen macroeconomic variables were conducted. The possible solutions on how to deal with resource abundance problem are following: investing resource revenues outside of the economy, implementing fiscal rules that will stabilize budget revenues and prevent inflation from rising, and diversifying export in terms of product and geographical structure. Consequently, these solutions have been introduced in Chile, the world leading producer of copper, several years ago and proved to be very successful. Chile enjoys stable resource revenues despite the business cycle and performance of the copper market, while its real effective rate and export competitiveness has not been eroded. T is paper presents, according to author's knowledge, the first detailed case study analysis of the country from Latin America, that has been successfully dealing with the resource abundance problem over several decades.</p></abstract>

The article aims at explaining how a small opened economy can effectively deal with a resource abundance problem. The thesis of the essay is a statement that Chile has been able to cope with the resource “outside” by developing proper institutions and diversifying the structure of its foreign trade. To verify the thesis, a literature review of theoretical recommendations how to utilize resource revenues without harming economy, as well as analyses of chosen macroeconomic variables were conducted. The possible solutions on how to deal with resource abundance problem are following: investing resource revenues outside of the economy, implementing fiscal rules that will stabilize budget revenues and prevent inflation from rising, and diversifying export in terms of product and geographical structure. Consequently, these solutions have been introduced in Chile, the world leading producer of copper, several years ago and proved to be very successful. Chile enjoys stable resource revenues despite the business cycle and performance of the copper market, while its real effective rate and export competitiveness has not been eroded. T is paper presents, according to author's knowledge, the first detailed case study analysis of the country from Latin America, that has been successfully dealing with the resource abundance problem over several decades.

Copper in Chile - When the Resource “Outside” Becomes a Blessing

PhD Student Collegium of Management and Finance Warsaw School of Economics

International Journal of Management and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Copper in Chile - When the Resource \u201cOutside\u201d Becomes a Blessing"}

The article aims at explaining how a small opened economy can effectively deal with a resource abundance problem. The thesis of the essay is a statement that...

Copper in Chile - When the Resource “Outside” Becomes a Blessing

Published Online: Oct 17, 2014

Page range: 141 - 154

DOI: https://doi.org/10.2478/ijme-2014-0032

Keywords
Dutch disease, resource abundance, resource revenues, Chile

© 2013 Konrad Kubacki and Paweł Wieprzowski

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Copper in Chile - When the Resource “Outside” Becomes a Blessing

Published Online: Oct 17, 2014

Page range: 141 - 154

DOI: https://doi.org/10.2478/ijme-2014-0032

KeywordsDutch disease, resource abundance, resource revenues, Chile

© 2013 Konrad Kubacki and Paweł Wieprzowski

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Keywords
Dutch disease, resource abundance, resource revenues, Chile