Mineral Resource Management and Economic Growth: What Zambia Should Learn from Chile

Abstract

Natural resource dependent economies are totted of being in a cycle of economic boom and slump, the natural resource curse. This paper looks at natural resource management and compares the relations between prices of copper and macroeconomic performance in Chile and Zambia, two copper-rich countries with contrasting fortunes. It explores the fiscal policies and mining taxes regimes, and non-fiscal benefits of mining. Eleven indicators are used to compare the macroeconomic performance of the two countries and domestic and external macroeconomic volatility and its possible source in the countries. Using the indicators, it was found that the Zambian economy is relatively more affected by fluctuations in copper prices than the Chilean economy. That both domestic and external macroeconomic uncertainty is more rampant in Zambia than in Chile shows evidence of the detrimental effect of Zambia’s indiscreet populism-driven policy inconsistencies on the economy.