Since the fall of prices in 2011, the global copper market has also continued to see a decline in ore quality. Chile, the world’s overwhelmingly largest producer of copper, has seen its GDP fall at about the same rate as copper. Chile is and will forever be the king of copper. Yet, a study of the Chilean economy I conducted in Santiago this summer, led me to question Chile’s economic dependence on the red metal.

Exacerbating my concern is a little-known allotrope called graphene while not yet manufactural at a commercial scale, graphene has the potential to unlock a previously unimaginable new world of technology. Researching Chile’s reliance on copper has led me to believe that graphene, which will present certain challenges in and of itself, will not be the only obstacle Chile will be forced to overcome. An unstable copper industry and a lack of a productive Research and Development (R&D) department will also catch up to what is commonly referred to as the Singapore of the Americas if the country does not aim to evolve beyond a commodity based economy.

Graphene is the revolutionary material created by Andre Geim and Konstantin Novoselov at the University of Manchester in 2002. As is often the case with materials that later change the world, its discovery happened by accident. One of Geim and Novoselov’s Ph.D. students was attempting to polish a one inch graphite crystal and thought he had failed until Geim pulled a piece of Scotch tape out of the trash and examined the residues from the experiment. What he found were layers of graphite that were the thinnest he had ever seen. He found that by playing with the tape, he could peel back even more layers of the graphite. What Geim soon realized was that he had discovered the world’s first two-dimensional material. When examined through the lens of a microscope an atom-thick layer of carbon is shown to be arrayed in a lattice of hexagons positioned into a honeycomb pattern.

Graphite had been studied since at least 1947 and the term graphene was coined in 1987. Yet although graphene had existed in theory, Geim and Novoselov’s initial results received harsh criticism and were rejected. It wasn’t until 2004 that “Electric Field Effect in Atomically Thin Carbon Films,” was published in Science. Six years later in 2010, Geim and Novoselov received the Nobel Prize in Physics, and then research and investment funds began to pour in. Scientists speedily ascertained qualities in graphene that seemed like science fiction: 200x stronger than steel, the previously strongest substance on Earth; 1 million times thinner than a human hair at only an atom thickness; it can stretch to 120% of its length; an electrical speed 250x faster than silicon; it can carry 1,000x more electricity than copper making it the world’s most conductive material; it is transparent, flexible, and impermeable. If it sounds like graphene could change the world, it is because it is a substance that undoubtedly will change the world. Manchester University frequently updates a website dedicated to graphene with articles that list the industries in which researchers are working year-round to find impactful uses for graphene.

According to the website, the industries and fields that will be impacted most are membranes, composites and coatings, energy, electronics, medicine, transportation, biomedical, sensors, deference, and desalination. Graphene membranes can be programmed to form a perfect barrier between gasses and liquids and block out harmful agents like carbon dioxide. Graphene coatings and composites will provide us with food and pharmaceutical coatings that will create a partition between water and oxygen, exponentially extending the life of products. These coatings could be programmed to be water-resistant or even rustproof, leading to the world’s fastest, lightest and greenest means of transportation such as planes, cars and bikes. Graphene can shrink lithium ion batteries making them last longer, and charge faster. Moreover, these batteries could be manufactured to be so flexible and transparent that they could be stitched into clothing, lightening the load for military personnel, for instance, who carry pounds of batteries every day.

Graphene will also revolutionize the biomedical and sensor field because the substance can be programmed to react to specific compounds at a molecular level. We will be able to learn ideal locations for growing crops with information on atmospheric conditions. The sensors can be used to save soldiers’ lives in instances of chemical warfare or detect bomb agents. Electronically, graphene will change the manner in which technology is incorporated into our life. The most conductive wiring and unprecedented computer speeds will result not only in the fastest products ever imagined, but because the material is flexible, wearable technology will be significantly more advanced than it is today. Smartphones you can wear around your wrist and tablets you can roll like a newspaper may be on the horizon. The substance is even close to being the replacement for silicon in computer chips. Should we prepare ourselves for a financial and demographic centered around the orbit of Graphene Valley?

Change, especially one as large in scale imagined by those who study grapheme does not happen overnight. John Colapinto, who wrote an article on graphene for the New Yorker, notes how, “The progress of a technology from the moment of discovery to transformative product is slow and meandering; the consensus among scientists is that it takes decades, even when things go well.” He went on to include discoveries that underwent decades of experimenting before uses for the technology were found (i.e. aluminum, the science behind the MRI machine, silicon). Humberto Plaza, academic at the Faculty of Physical Sciences and Mathematics of the University of Chile, maintains in an Emol article that graphene needs advanced processing in order to obtain it and furthermore, its manipulation is highly complex and expensive. We are looking at perhaps several decades before substantial research on graphene can be carried out. Nonetheless, given the embrace of the material within the scientific community, results could appear sooner.

Investing in graphene has become popular around the globe as new discoveries emerge almost weekly in the graphene research industry. The European Union has created a Graphene Flagship with roughly $1 billion of resources dedicated to the development of the material. This scale of research and interest in graphene provide both a great threat and a great opportunity for Chile in the years to come, but neither will materialize until the business community squares itself to the task at hand.

It’s nothing new to say that the world’s leading producer of copper, Chile, is perhaps too economically dependent on copper. Chile’s GDP, roughly $247 billion USD, has steadily declined since its peak of $277 billion in 2013 accompanied by a fall in the value of copper. One of the key issues Chile is facing today is the challenge to diversify its economy. Of course, copper is a sought-after commodity globally, especially in China, and Chile will remain the leader producer of copper for the foreseeable future. Yet Chile’s reliance on copper, its lack of economic diversification, and threats of new products emerging on the market, make it in Chile’s best interest to establish policies promoting R&D and consequently, innovation, so that the country can export higher quality products and fully embody its nickname of “Chilecon Valley.” Chile’s Country Risk Report noted that one of its weaknesses is that with economic growth based heavily on the export of raw materials, Chile remains vulnerable to external demand shocks. Furthermore, Chile’s dependence on oil and natural gas imports exposes the economy to a higher risk of supply shocks and higher commodity prices.

Booms and busts in external demand are likely to come from China, who, according to CEPAL, the UN’s Economic Commission for Latin America and the Caribbean, receives 85% of Chile’s exports in metals mostly copper. Overall, 7% of Chilean GDP comes from copper exports to China. Instead of Chile selling China higher quality copper products, the Chinese alter Chilean copper ore specifically according to their needs. Advances in graphene could eventually render some uses for copper in China obsolete which could prove damaging to Chile.

Chile’s dependence on the copper market presents numerous challenges to maintain financial profitability and retaining general and skilled miners. The mining industry in Chile, which makes up roughly 25% of Chile’s GDP, has had a rough two years with a continuous decline in ore grade and recently with strikes at Chile’s largest mine, Escondida. In April of this year, Chile’s central bank said the Escondida strike would knock an entire percentage point off GDP growth in the first quarter, underscoring the importance of copper to the country. Beyond the risk of labor disputes, mining is the most energy-intensive industry in Chile, responsible for over 20% of total electricity consumption. A problem is that 87% of Chile’s energy comes from fossil fuels such as natural gas. Nearly all of these energy sources are imported, leaving Chile once again vulnerable to external demand shocks. Considering Chile’s economic focus on mining and exporting copper, it’s clear that there is room for cutting some expenses.

Many of the professionals operating the large mines have become financially comfortable with how their operations are run and therefore do not see an immediate need for new sources of energy nor the advancement of higher quality copper products to export. Chile is primarily producing raw copper materials and if they were to invest in second or third step, higher-grade copper products, they would consequently create more jobs and see higher export profits. For example, if they knew China was going to convert the copper into wiring for automobiles, Chile could do so before exporting. The problem we must understand turns on a lack of skilled labor, but as I mentioned earlier, 25% of their exports are made up of copper products while another 24% consist of ores, slag and ash. All of these products can be manufactured and sold in more expensive forms if the Chilean business community invested in the skills-training to do so.

In short, Chile has to show a desire and subsequently invest to advance their industry. It seems like there may be complacency occurring between major shareholders and the government. Other challenges facing Chile’s declining mining venture include: lack of dams and access to hydroelectric power and water in general, a shortage of skilled laborers which is driving wages up, difficulties in meeting environmental sustainability requirements, issues receiving community support and engagement, and comfort and complacency- that does lend itself to innovation One might wager that Chilean innovation has fallen victim to the nation’s broad economic success.

Confronting Chile today is a lack of valuable investment and productivity in research and development, R&D, which, if improved, could boost numerous areas of Chile’s economy and offset some other economic challenges. Between 2007 and 2012, Chile’s R&D expenditure increased by roughly 42% (CLP 281 billion to CLP 400 billion), but this only represented 0.3% of Chile’s GDP in 2012, falling behind close neighbors Brazil (1.2% of GDP) and Uruguay (0.9% of GDP). The majority of Chile’s R&D is financed by the government and is carried out by some of the larger universities rather than in the business sector. R&D spending in the business sector only consisted of 45% of gross expenditure on R&D where most developed countries spending in the business sector usually totals two-thirds to three-quarters of gross expenditure. Chilean R&D should be spent internally and in productive, commercially oriented research, but 80-90% of it is spent on importing machinery and basic research. The country lacks pre-competitive collaborative research relationships and consequently is underperforming in relation to technology transfer and the efficiency of its R&D expenditures (word for word mining report).

In 2015, the Organization for Economic Co-Operation and Development, or OECD, published “Diagnostic of Chile’s Engagement in Global Value Chains,” which assesses Chile’s role in the global economy by analyzing extensive data from several Chilean government entities and through consulting with major stakeholders. They believe a lack of human capital in science, technology and mathematics continue to inhibit the country’s transition to a more innovative economy where for example, higher quality copper products could be produced. These R&D hindrances are already causing issues and the rise of graphene will not help if Chile continues to watch rather than play.

In another Emol article, Patricio Meller, president of Fundación Chile, claims that Chile should be one of the foremost investors in graphene because what affects copper affects the entire country. The article states that, “[He] see[s] an impressive explosion in the increase of patents, publications and more than $3 billion [USD] being spent on research in countries around graphene but, who is investigating this in Chile?” The explosion of patents he refers to may even be understated as they saw a 1,800% increase from 2004 to 2014. There is a global competition currently going on among countries seeking some of the first practical uses of graphene, but, surprisingly, Chile is not one of those countries in the race. Marcela Angulo, the Technological Capabilities Manager for Corfo, a diversification initiative funded by the Chilean government, remarks that since the discovery of graphene, there have been two overwhelming positions taken by academics: the alarmist who thinks graphene will replace copper overnight and the other who believes this will not happen for 50 years or more.

Most Chilean academics, like the previously mentioned Humberto Plaza, understand that graphene will not destroy Chile’s economy, arguing that “graphene will never become a complete substitute for copper, it is obviously going to replace a percentage but it is difficult to predict if it will be low or high.” This is a common feeling amongst Chileans who study the matter, but perhaps they have an intrinsic bias, because they do not want to see graphene replace copper. Corfo manager, Angulo, maintains that graphene is a certain threat because it will offset copper in several areas where today it is in a solid economic position. Regardless of the extent of harm graphene could do to Chile’s economy, it is not clear why Chile is not becoming a player in the graphene arena.

Of the almost 41 thousand investigations conducted before or during 2014, Chile was only behind 61. Chile is not a country with a surplus of natural resources. If graphene enters the world at a more easily manufactured level, the country will have to become involved if it wants to compete. One immediate step Chile can take toward better positioning is in the area of collaboration. Conducting only 1% of graphene investigations worldwide will not be enough, but Chile could begin collaborations with other countries. Chile is the largest producer of copper and Europe is currently one of the leading geographical locations for graphene. If Chile helps out some of the larger research programs and collaborates regarding conductive and resistant graphene composites and hybrids with copper, they could put themselves in a beneficial position should a breakthrough be made. Collaborative research outside the country will lead to further economic relationships and open Chile’s market to new technological investments permitting divergence from copper dependency.

Chile must now adopt a new view of copper. Gone should be the notion that copper will always provide a tailwind to the Latin American tiger. Copper may protect Chile for 10 or 20 more years, but we can expect graphene to become a household term within that time. Chile was the sight of a post-Cold War “economic miracle.” This led it to enjoy the most advanced economy and highest standard of living in Latin America in recent years. Yet, if we have learned anything from the formerly robust Venezuelan economy, it is that miracles don’t last forever.