This study is a critical economic and statistical analysis of the copper industry in Chile with emphasis on the period 1940-1961. Professor Mario Vera Valenzuela, assembling and interpreting a wealth of statistical data, shows the relationship between copper and the Chilean economy and evaluates the copper policies pursued by the government over the past two decades. The author concludes by proposing changes in the government’s policy. The adoption of these proposals, he believes, would quicken the industrialization process and solve the problem of the lagging Chilean economy.
The book deals primarily with La Gran Minería del Cobre which is composed of the Braden company, controlled by Kennecott, and the Chile Exploration and Andes companies, controlled by Anaconda. These foreign-owned corporations account for approximately ninety per cent of Chilean production. The reader discovers the location, ore reserves, capital investment, production costs, volume of output, commercial policies, profits, taxes paid, and future prospects of each member of La Gran Minería. While giving little attention to the claims of the copper companies, the author finds much to criticize in their policies. For instance, he deplores the recent failure to raise the refining capacity in Chile, the failure to make full use of the internal market for supplies, and the failure to maintain Chile’s “historic” share of the world copper market.
Mario Vera Valenzuela subjects governmental policies to an equally critical analysis. Since the adoption of the Law of New Treatment in 1955, he maintains, governmental policy has failed to bring Chile the maximum advantage from its copper resources. Specifically, he questions the effectiveness of the tax policy designed to encourage increased production. Under the plan, the effective tax rate has fallen from 67.8% in 1955 to 52.9% in 1961. The current rate, he asserts, deprives Chile of a fair share of the revenues of the copper industry. He also objects to the rapid depreciation rule, the import tax exemptions, and the rules for determining costs of production that tend to favor the companies.
The author clearly and dispassionately advances the thesis that foreign enterprise in an underdeveloped country must be strictly regulated to protect the nation’s welfare. In addition to correcting the deficiencies already cited, the new policies proposed include the establishment of a metals exchange market in Chile and the opening of new markets for Chilean copper in eastern Europe. Unfortunately, there is no discussion of how Chile has employed her copper revenues.
Even though all of the conclusions drawn do not appear warranted, the book remains an interesting account. Presented in a concise and straightforward manner, it is based primarily upon government documents. Few secondary works are cited. It is a useful addition to the literature on the Chilean copper industry.