The Chilean economy is highly dependent on international demand. Exports of goods and non-factor services, accounting for roughly 30 per cent of GDP, are a major source of growth. But small emerging economies like Chile face tough international competition. A much debated question in this context has been whether the persistent Chilean specialisation in primary commodities is a handicap for sustained growth. Dependence on a narrow range of commodities has exposed the Chilean economy to large fluctuations in the terms of trade and international demand. These have not been easy to accommodate...