LATIN AMERICAN TIGERS:
START UP CHILE
Chile is the world’s undisputed copper heavyweight, cradling seven of the world’s top 14 copper mines. The biggest mine, Escondida, produces over a million tonnes of the red metal each year, equal to 5% of the world’s annual copper supply. For over 30 years, the country has been the world’s top copper producer, and today close to 50% of the country’s exports come from copper-related products. Hence, it is the richest and most open economy in Latin America. This incredible economic leap can be credited to the steady advancement in milling technology, economic reforms, and market diversification so the country stays attractive to foreign direct investment. Copper production went from under 1 million tonnes per year in the 1970s, to over 5 million tonnes per year in the 2000s. And apart from copper, Chile is also rich in other minerals such as gold, molybdenum, iron, silver and produces more lithium than any country from its scalars. But Chile's economy is particularly vulnerable to global fluctuations in copper prices, which last June dropped to its lowest level of the year on worries over China’s economic growth. From 2010 to 2014, Chile's economy grew at an average of 5 percent thanks to high copper prices, only for the country's growth rate to drop to below 2 percent per year when commodity prices plunged between 2015 and 2017. Such uncertainty is what is encouraging the Latin American tiger to propel the economy in a different direction. Recently, the government started exploring the possibility of transforming the country into a tech hub. And although two issues — education and electricity — stand in the way of Chile's tech dreams, even they are unlikely to slow down the country's enthusiasm in the long run.
The program — dubbed Start-Up Chile — was slow to lift off the ground, but the project has gained increased traction since 2017, when the government implemented a new express visa for experts and investors in the technology industry. Tech entrepreneurs and skilled professionals can now obtain the visa in as little as 15 days, as opposed to a wait of at least two years in previous times. Additionally, Santiago provides at least $40,000 in free equity capital (for companies that demonstrate persistent success, the figure can rise up to $140,000), bank accounts and offices for those willing to relocate to Chile. As a result, more than 1,300 startups from different fields have launched operations in Chile in the past eight years. In total, around 40 percent of the employees at such companies are foreigners who benefited from Chile’s innovative programs for technology professionals. And encouraged by the progress achieved in the tech sector, Amazon is now one of the giants looking to invest $1 billion in a new computer data processing center in either Argentina or Chile. However, the company is holding back plans because of the possible electricity drain data centers impose on the national grid. Nonetheless, Chile’s electricity demand is set to rise anyways because the country is also expanding its cobalt and lithium production driven by talks with Tesla to build a lithium-processing plant in the country. Currently, however, what is halting the acceleration of development in the country is that about 60 percent of Chile’s energy matrix is dependent on fossil fuels — most of which Santiago must import. In fact, Chile is burdened by the second-highest electricity prices in South America, trailing only Uruguay. Going forward, attracting investments in the renewable energy sector remains the hope of a future invested in tech for the Latin American superpower.