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• Teaching Note | HBS Case Collection | November 2020

  Unrest in Chile

  Vincent Pons, John Masko, Rafael Di Tella and William Mullins

  In 2020, Chileans would head to the ballot box to decide their country’s future. Many international observers credited Chile’s decades of neoliberal governance with turning the country into Latin America’s “Tiger,” a prosperous, diversified economy on its way to becoming the continent’s first developed country. But in October of 2019, a mass protest movement ground the country to a halt and shocked its political class, showing the world a different Chile—one defined by inequality, social distrust, and a young generation of political activists. As Chile prepared to vote in the fall of 2020 on whether to adopt a new constitution, could it sculpt a more equitable society while remaining “the exception” on a continent known for its political instability? Or would Chile’s prosperity go the same way as its neoliberal experiment?

  Keywords: Developing Countries and Economies; Macroeconomics; Economy; Political Elections; Public Opinion; Social Issues; Equality and Inequality; System Shocks; Chile; Latin America;

  Citation:

  Pons, Vincent, John Masko, Rafael Di Tella, and William Mullins. "Unrest in Chile." Harvard Business School Teaching Note 721-016, November 2020.  View Details

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• Case | HBS Case Collection | February 2020 (Revised November 2020)

  Australia: Commodities, Competitiveness, Climate and China

  Richard H.K. Vietor and Laura Alfaro

  For the past few decades, Australia has dealt with the benefits and costs of repeated mining booms—inflation, a housing bubble, a current account deficit, and growing dependence on China. Between 1996 and 2007, however, Australia had most of these issues under control and grew at impressive rates, becoming one of the richest of developed countries. Yet competitiveness in its non-mining sectors declined. Since the financial crisis, additional challenges associated with climate change, minerals taxes, migration, fiscal deficits, and currency fluctuations have complicated the issues facing both Labor and Liberal administrations, with a very thin majority. Meanwhile, Australia's non-mineral competitiveness continues to recede.

  Keywords: commodities; competitiveness; carbon tax; environment; capital flows; current account; Mining; Economy; Problems and Challenges; Climate Change; Taxation; Competition; Financial Condition; Australia;

  Citation:

  Vietor, Richard H.K., and Laura Alfaro. "Australia: Commodities, Competitiveness, Climate and China." Harvard Business School Case 720-028, February 2020. (Revised November 2020.)  View Details

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• Case | HBS Case Collection | July 2005 (Revised September 2020)

  The U.S. Current Account Deficit

  Laura Alfaro, Rafael Di Tella, Ingrid Vogel, Renee Kim, Sarah Jeong, Matthew Johnson, Jonathan Schlefer, Laura Alfaro, Rafael Di Tella, Ingrid Vogel, Renee Kim, Sarah Jeong, Matthew Johnson and Jonathan Schlefer

  Investors and policymakers throughout the world were confronted with the risk of painful economic consequences arising from the large U.S. current account deficit. In 2007, the U.S. current account deficit was $731 billion, equivalent to 5.3% of GDP. The implications of the deficit were debated with intensity. At one extreme, it was argued that large deficits would eventually resolve themselves smoothly, even if they persisted for many more years. Former Federal Reserve Chairman Alan Greenspan was among those expecting a "benign resolution to the U.S. current account imbalance." Other analysts, such as economists at the World Bank, believed the large deficits raised the risk of a sharp and disorderly fall of the dollar and that necessary macroeconomic adjustment could be painful, for the United States as well as for the rest of the world. The Financial Times asked: "How long will foreigners be prepared to make such generous 'gifts' to the US?" In this environment, Berkshire Hathaway, run by legendary investor Warren Buffett, postulated that current account imbalances would lead to "some chaotic markets in which currency adjustments play a part" and announced to shareholders a plan to increase investment in overseas companies to protect against this risk. It remained to be seen what the short- and long-term implications of the current account deficit would ultimately yield.

  Keywords: world economy; Macroeconomics; Borrowing and Debt; Currency; Foreign Direct Investment; Business and Government Relations; United States;

  Citation:

  Alfaro, Laura, Rafael Di Tella, Ingrid Vogel, Renee Kim, Sarah Jeong, Matthew Johnson, and Jonathan Schlefer. "The U.S. Current Account Deficit." Harvard Business School Case 706-002, July 2005. (Revised September 2020.)  View Details

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