Dani Rodrik points us to a fascinating Bloomberg story detailing the saga of Chile's Minister of Finance, Andres Velasco. Last November, Velasco was being burned in effigy by marching protesters. Today, he is the most popular minister in the Chilean government.
What happened? Chile's primary export is copper, and its biggest mining company is state-run. During the extended commodity price boom that sent copper prices booming, Velasco played it safe, squirreling away a huge proportion of the copper windfall, investing the proceeds abroad, and building up Chile's Treasury holdings from $5.9 billion to $48.6 billion -- equivalent to a whopping thirty percent of Chile's GDP -- during his three year tenure. Then: Pop-went-the-global-economy! But Chile was ready.
Friday, April 24, 2009
Chile's Old Testament economics
Sometimes unpopular policy is good policy
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