How Economic Spillovers from Copper Mining Affect Chile’s Manufacturing SMEs and Industrial Linkages

Abstract

Chile’s copper mining industry has been a central pillar of its economy, contributing significantly to GDP, employment, and exports. However, the industry’s spillover effects on small and medium-sized enterprises (SMEs) and broader industrial linkages have been underexplored. This paper investigates the economic impact of copper mining on Chile’s manufacturing SMEs and evaluates the strength of industrial linkages between the mining sector and other industries. It examines how SMEs benefit from copper price booms and suffer during contractions, highlighting the vulnerabilities of over-reliance on the copper sector. Furthermore, the paper analyzes the weak linkages between copper mining and other domestic industries, emphasizing the need for economic diversification to promote sustainable growth. Strategies to strengthen industrial linkages and promote value-added production within the copper supply chain are discussed as critical measures for reducing Chile’s dependence on copper exports and building a more resilient economy.