Chile’s small open economy with significant mismatch between the production and consumption
baskets may be represented by three stylized sectors, a commodity sector, a non-commodity
tradable sector, and a non-tradable sector. This paper estimates the effect of copper price shocks
on mining, manufacturing, and construction—each embodying a sector type. The empirical
findings are for positive spillovers from mining to the other two sectors. However, the estimated
size of the spillovers seems modest, which raises the question of the potential for mining to be
better integrated with the rest of the economy.