Brain exports are Chile's big bet for future

Andres Oppenheimer, The Miami Herald

June 5, 2008

Every now and then, you come across some news that makes you think there is a golden future
ahead for Latin America -- or at least for part of it.
That's how I felt earlier this week when, in an interview with Chilean Foreign Minister Alejandro
Foxley, I learned about Chile's recent decision to create a $6 billion fund to send 6,500 Chilean
students a year abroad to pursue post-graduate studies in the United States, European and
Australian universities. The students will receive full scholarships, paid from the new government
fund's annual interest.
For a relatively small country of 16.4 million people, it will amount to a massive export of some of its
best brains in hopes of getting some of them to return home with greater technological skills, better
international contacts, and new ideas to help the country diversify its exports.
Until only three years ago, the Chilean government paid for just 170 post-graduate scholarships a
year to study abroad. With the new fund, the number of post-graduate scholarships abroad will be
raised to 1,000 this year, 2,500 next year, and to 6,500 by 2012.
Most of the scholarships will be focused on post-graduate engineering, science and technology
studies, which are considered the key areas to help the country produce more sophisticated -- and
higher priced -- export products.
''If Chile wants to grow faster, we can't keep exporting just copper, cellulose and salmon,'' Foxley
said. ``We need to create new products. We need to take a whole new generation of students, or as
many as we can, and expose them to the global economy.''
The new fund, known as Bi-Centennial Human Capital Fund, will come from Chile's recent export
surpluses from sky-high copper and other commodity prices.
It will be invested in banks abroad to keep the money from entering Chile and creating inflationary
pressures at home. In addition, the new fund -- first announced by President Michelle Bachelet in a
May 21 state of the union address -- will pay for additional scholarships to 2,000 young technicians
for courses at community colleges in the United States and other industrialized countries, and for at
least 100 foreign scientists to teach at regional universities in Chile's countryside.
I asked Foxley: Aren't you afraid of a massive brain drain? Many of the 6,500 students pursuing
post-graduate degrees in the United States and Europe may not go back.
''We don't care if they don't return to Chile immediately,'' Foxley said. ``If you look at what has been
happening in India, many Indian computer engineers have remained for 10 years working in the
United States, and then have returned home to start up new companies. We have to think long-
term.''
Patricio Navia, a professor at Chile's Diego Portales University and New York University, says the
new fund is an excellent idea whose success is not guaranteed.
'The plan's implementation will be much more difficult than its announcement, because the students'
selection process will be carried out by the state, which is often not very efficient,'' Navia said. ``But
if the selection process is transparent, it will be a big success.''
My opinion: It remains to be seen if this plan will be successful. In 2003, Chile proudly announced it
was becoming the first Latin American nation to adopt English as an obligatory language for all
schoolchildren, starting in fifth grade, and Chileans are still waiting for it to happen. (There are not
enough English teachers, officials say.)
But this time, the money is already earmarked for the scholarships, and there are several other
reasons why it should be applauded.

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First, it's great that Chile is using its commodity export boom to fund education and innovation. That
will be the fastest way to become a First World country. Second, it's great that it will focus on
engineering, science and technology. Those are the areas that, like China and India have shown,
help a country the most to produce higher-value added goods. Third, it's great that the education
fund will be kept abroad, safe from domestic economic and political turbulences.
Amid the barrage of bad news from Latin America, this is the kind of thing that renews one's hopes
in the region.