May 31, 2023

GIX Chile: A Macroeconomic Deep Dive

By Bryan Dextradeur T’23

Bryan Dextradeur T’23 reflects on the interconnected mix of industries—from copper mines to e-commerce—that make up Chile’s economic landscape.

What interested you about the Global Insight Expedition (GIX) location and topic?
Chile is a fascinating country. It is a small, but relatively wealthy, nation in Latin America. On the one hand, its abundant natural resources and high recent GDP growth present attractive opportunities for investment. Chile also has some of the most robust institutions in Latin America. However, the drafting of a new constitution catalyzed by social unrest in 2019 has created an uncertain outlook. I was interested in diving deeper into these factors to understand which sectors of the Chilean economy—if any—provide the best risk/return profile for an investor.

Atacama Desert

What site visits, tours, meetings, and/or people were most impactful for you during the GIX?
On the first day of the trip, we visited the Central Bank of Chile and heard about Chile’s historical and current efforts to combat inflation and maintain a stable currency, which was helpful context for understanding the country’s macroeconomic environment. As we began to dive into specific segments of the economy, we met with business leaders from the natural resources, agriculture, and e-commerce sectors at companies ranging from nascent startups to large global conglomerates.

One especially impactful experience was a visit to a lithium mine operated by SQM in Salar de Atacama—the driest place on earth. During the session, we learned more about the refining process and timeframe, efforts to drive sustainability, government regulations, and product applications in EV batteries. We were also able to take part in some incredible excursions outside of the academic work—from seeing the sand dunes in el Valle de la Luna to tasting the local culture first-hand at Teatro Alicia, I really felt like I was able to experience Chile!

How did Tuck faculty and/or staff contribute to your overall GIX experience?
Our professor, Ramon Lecuona, went above and beyond with the trip itinerary. The relationships he had with local business leaders, government officials, university academics, and Tuck alumni were especially valuable in allowing us to meet in person with a diverse cross-sector of leaders in the business ecosystem (for example, the owners of a winery that a Tuck alum used to work for). Having spent a substantial amount of time in Chile previously, Ramon did a great job of helping us synthesize the takeaways from each leader we met with into an overall investment thesis for Chile (as well as directing us toward all the best restaurants in Santiago!).

What is a key takeaway from this experience? What have you learned?
One key takeaway from the experience is that a country’s overall industry mix has important spillover effects. In a country whose exports are dominated by a particular commodified industry, such as copper mining in Chile, fluctuations in the price of that export drive fluctuations in the value of that country’s currency. In turn, this makes the products produced by other industries either more or less expensive relative to those in other countries, necessarily impacting demand and overall economic health. Chile has worked hard in diversifying its economy, but it is not yet there.

A second key lesson is that business models that work in more developed countries like the US do not necessarily work as successfully in emerging markets like Chile. For example, when we think about e-commerce, most Americans automatically picture Amazon—but its penetration is nominal in Latin America. In Chile, as with many Latin American countries, Mercado Libre has grown exponentially, owing in large part to its construction of an ecosystem that, for example, facilitates digital payments in this region of credit card underutilization through the Mercado Pago platform.

Bryan Dextradeur

Bryan grew up outside of Boston, MA and attended the College of the Holy Cross, where he was a pre-med molecular biology major. Prior to Tuck, he was a strategy and operations consultant at Deloitte Consulting LLP, where he primarily focused on health care and life sciences clients with cases spanning growth strategy, operating model design, digital transformation, and M&A diligence. He interned on the Operations Innovation Team at DaVita Kidney Care in Denver, CO last summer and will be joining Bain & Company as a consultant after graduation. Outside of class, you can find him exploring new runs on IKON pass mountains, hiking the forty-eight 4K-foot peaks of New Hampshire, cooking family-style dinners, and listening to political podcasts.

Global Insight Expeditions (GIXs) help students develop cultural awareness, empathy for the thoughts and attitudes of local people, and agility to adapt their behavior to successfully navigate different business environments through structured reflection. Each course begins with classroom sessions on Tuck’s campus. Students then travel with one or two faculty members where they engage with corporate leaders, entrepreneurs, community leaders, government officials, and local people from different walks of life.