Concentrar o diversificar exportaciones: el caso del cobre en Chile

Abstract

The paper deals with a quantitative evaluation of export expansion strategies in countries specialized in exporting one basic primary product. The study is applied to the case of Chilean copper. An optimizing multisectoral model is used. A non-linear function (linearly aproximized) relating foreign exchange earnings to quantities of copper exported through the price-elasticity of demand, is introduced into the model. The optimizing model, which is built in a general equilibrium framework, makes it possible to estimate social costs and benefits of alternative export strategies. The model's results point to the advantage of export diversification if world copper prices in the medium term were below 75 cts. per pound (dollars 1974). The methodology developed in this paper can be applied to other raw-materials exporting economies.