The Rent-Capture Gap: Two Centuries of Commodity Cycles and Institutional Readiness in Chilean Economic Development

This working paper argues that natural-resource abundance is neither a necessary nor a sufficient condition for sustained economic development, and that the gap between resource endowment and institutional readiness — the fiscal, industrial, and legal-regulatory capacity to capture, reinvest, and stabilize resource rents — is a more reliable predictor of which resource-dependent economies convert a commodity boom into durable prosperity. The argument is developed through a single national case examined across four distinct commodity cycles: Chile's nineteenth-century silver and wheat exports, the nitrate boom and collapse of 1879-1930, the state-led copper economy from the 1939 founding of CORFO through the 1971 nationalization, and the still-unresolved lithium boom of the 2020s. Each cycle exhibits a different configuration of fiscal, industrial, and legal readiness, and the paper argues that the resulting variation in outcomes — boom-bust volatility under nitrate, contested state capture under copper, an open question under lithium — tracks institutional readiness more closely than the value or scarcity of the underlying resource. For the period since 1960, where annual national-accounts data of adequate quality exist, the paper also reports a targeted econometric check — Chow structural-break tests and a Newey-West mean-shift regression on real Chilean GDP per capita — of whether the institutional ruptures the historical narrative identifies (1973, 1982, 1990, 2019) correspond to detectable breaks in the country's growth trajectory; the results partially, but not uniformly, support the narrative, and are reported with the corresponding methodological caveats rather than as clean causal evidence. The paper connects this historical and empirical pattern explicitly to the author's related work on institutional readiness for AI-enabled macroprudential policy and capital-flow governance in emerging economies. The pre-1960 portion of the argument remains conceptual and illustrative rather than causal, in the absence of comparable annual data for those earlier cycles.