Scales of Production in Mining Economies. The Case of Chile in its Regional Dimension

Abstract

An important share of Chilean copper production is located in two regions: Antofagasta and Atacama. In recent years there has been a rise in the price of copper, and the incomes of the inhabitants of these regions have varied differently as a response to the variations in the price of copper. This article analyzes these differences between the evolution of regional income based on the size or scale of production in the mining sector. Using an input-output model disaggregated by the scale of production (large versus small and medium-sized scales) of the mining sector for each region, linkages and multipliers have been calculated and a sensitivity analysis carried out in order to test the strength of the estimations. This strategy allowed for identifying and calculating the impact of each scale on local income and production, showing the heterogeneous impact of the mining sector on local economies, which is very relevant for evaluating the current Chilean mining policy.