Is Chile’s Economic Heyday Behind It?

Is Chile's Economic Heyday Behind It?

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Chile, like neighboring Argentina, is isolated from the world’s major markets because of its geography. The country is lodged between the Andes Mountains to its east and the vast South Pacific Ocean to its west. And for much of its political and economic development, its regional trading partners were few and far between. The Argentine and Brazilian economies, for instance, did not industrialize until the last several decades of the 20th century. Thanks to its wealth of mineral deposits, however, Chile became an important source of raw materials — particularly copper — for construction and manufacturing sectors in the United States, Europe and, more recently, Asia. These trade partnerships form the backbone of Chile’s economy to this day; demand from China, Europe and the United States combined currently accounts for around 58 percent of the country’s exports. Nearly 45 percent of Chile’s total exports relate to copper mining, the government’s main source of export revenues.

This dependence on overseas commodity markets has put Chile at the mercy of global economic trends. The country’s economy grew rapidly in…