Tuesday, March 16, 2010

Day 3: Development, Economics, and Poverty

The time differential plus the great Chilean wines makes getting going in the morning difficult. But, with great gusto, my classmates and I got serious and put on some suits. It was time to meet with CORFO, the Central Bank of Chile, and Un Techo Para Mi Pais.

National Development Corporation (sp? CORFO) is an effort in Chile to foster internal growth, bring in foreign investment, and create collaboration between Chilean and the world. Tax breaks, seed funding, and a rich network are provided to foreign entrepreneurs and corporations to expand the economy. This is critical for two reasons:

  1. Chile has very little large-scale manufacturing
  2. Future growth in the Chilean economy relies on extending to the global markets

CORFO is currently focusing on bringing the service, technology, and biotechnology industries to Chile. CORFO is set to change because Pinera’s new government is likely to restructure CORFO.

Central Bank of Chile

In a recent economics class that was part of the TMMBA program, we learned that an economy could pick two of the following three things to control inflation: currency, issuance of bonds, and setting interest rates. Chile floats their currency exchange rates, so the Central Bank issue bonds and set interest rates. The Central Bank is autonomous, and is not influenced by presidential elections.
Chile’s primary export is copper. Over 50% of their economy is copper production. This is good, because they receive royalties and own 35% of the copper industry. Chile also imports most of their fuels, manufactured goods, and intellectual property. But, this combination of factors makes Chile vulnerable to external shocks; if the world market on oil rises or copper prices fall, Chile’s economy will be impacted. This makes managing a stable economy difficult, but Chile has been very successful in doing so.

(I need more time to digest what we learned, so I’ll revisit this with a more rested eye.)

Un Techo Para Mi Pais
When a natural disaster hits an impoverished area of the world, a great deal of attention is immediately focused on that area. News crews, funding, and volunteers flood in to help. Eventually, this becomes yesterday's news. Once the news crews leave and resources dwindle, reality sets in for the extreme poor living in the slums. Un Techo Para Mi Pais (UTPMP) steps in and keeps the awareness within the affected country. They do this by building temporary housing for people living in slums.
The temporary housing provides immediate shelter for the poor and creates a multi-faceted symbol:

  • Builds trust between UTPMP and the affected people
  • Gives these people a symbol of hope
  • Creates awareness among people in the country of origin of how bad the slum situation is
  • Inspires activism and volunteerism among people in the country affected
  • Pressures the local government to provide more support for these individuals

From an organizational standpoint, UTPMP has been very successful at scaling their organization. This success is due to an organic growth model, low-touch management, flattened management hierarchy, and highly customized regional offices. Part of this success, as one of the TMMBA folks pointed out, was the short-term appointment of most of their labor. UTPMP volunteers are primarily college age adults who at most spend 2 years working on the project. This means that no-one gets entrenched in the organization; it’s agile.

1 comment:

  1. CORFO = _Cor_poración de _Fo_mento de la Producción (English --> Corporation for the fostering of production)