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  • March 2010 (Revised May 2013)
  • Case
  • HBS Case Collection

Chile's Copper Surplus: The Road Not Taken (A)

By: Laura Alfaro, Dante Roscini and Renee Kim
  • Format:Print
  • | Language:English
  • | Pages:25
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Abstract

In 2008, Andres Velasco, Chile's Finance Minister, was under mounting criticisms over his fiscal policy. As the world's largest copper producer, Chile was benefiting from the rise in copper prices, which had more than tripled since 2003. Copper revenues translated into greater income for the government as Chile's biggest copper producer, Codelco, was a state-owned enterprise. Velasco had chosen to save the bulk of the copper revenues into two stabilization funds; by the end of August 2008, the collective amount represented more than 20% of Chile's GDP. Several critics wanted the funds to be used to improve the poor public education system, income gap, and other impending social issues. After all, Chile had one of the most unequal distributions of wealth in the world. Productivity was stagnant and economic growth had slowed down significantly since the 1990s. What should Velasco do amid growing public discontent? Was it really in Chile's best interest to keep saving the copper wealth?

Keywords

Developing Countries and Economies; Economic Growth; Metals and Minerals; Investment Funds; Policy; State Ownership; Wealth; Chile

Citation

Alfaro, Laura, Dante Roscini, and Renee Kim. "Chile's Copper Surplus: The Road Not Taken (A)." Harvard Business School Case 710-019, March 2010. (Revised May 2013.)
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About The Authors

Laura Alfaro

General Management
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Dante Roscini

Business, Government and the International Economy
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Related Work

    • March 2010 (Revised May 2013)
    • Faculty Research

    Chile's Copper Surplus: The Road Not Taken (B)

    By: Laura Alfaro, Dante Roscini and Renee Kim
    • March 2010 (Revised May 2013)
    • Faculty Research

    Chile's Copper Surplus: The Road Not Taken (A)

    By: Laura Alfaro, Dante Roscini and Renee Kim
Related Work
  • Chile's Copper Surplus: The Road Not Taken (B) By: Laura Alfaro, Dante Roscini and Renee Kim
  • Chile's Copper Surplus: The Road Not Taken (A) By: Laura Alfaro, Dante Roscini and Renee Kim
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