Mining Spillovers in Chile

IMF Working Papers, July 31, 2017

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Mining Spillovers in Chile

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Bibliographic details

• Authors: Esther Perez Ruiz
• Published: July 31, 2017
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781484312698.001

Summary

• Chile’s small open economy can be represented by three stylized sectors: a commodity sector, a non-commodity tradable sector, and a non-tradable sector.
• The paper estimates the effect of copper price shocks on mining, manufacturing, and construction—each embodying one of the sector types.
• Empirical findings show positive spillovers from mining to manufacturing and construction.
• The estimated size of the spillovers is modest, raising questions about the potential for mining to be better integrated with the rest of the economy.

Empirical focus and methodology

• Sectoral focus: mining (commodity sector), manufacturing (non-commodity tradable sector), construction (non-tradable sector).
• Shock analyzed: copper price shocks (world copper price).
• Outcome variables: sectoral production and output spillovers; real effective exchange rates and prices are relevant themes.

Key findings

• Positive spillovers from mining to:
  • Manufacturing (non-commodity tradable sector).
  • Construction (non-tradable sector).
• Magnitude: described as modest (no additional numeric magnitudes provided on the page).
• Related considerations highlighted: Dutch disease, expenditure switching, exchange rate effects, costs of production, capital cost.

Policy implications and questions raised

• The modest size of observed spillovers implies limited integration of mining with the broader economy.
• Policy-relevant question: potential for mining to be better integrated with the rest of the economy to amplify spillovers.
• Areas relevant for policy analysis: expenditure switching effects, exchange rate dynamics (real effective exchange rates), and structural policies to link mining with manufacturing and construction.

Content in this bundle

• Mining Spillovers in Chile, WP/17/177, July 2017
  • Mining Spillovers in Chile, WP/17/177, July 2017 (Markdown version)
  • Mining Spillovers in Chile, WP/17/177, July 2017 (PDF)