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South America Boom Backfires on Commodity Complacency

Venture capitalist Arnon Kohavi arrived in Chile last year aiming to raise $40 million for technology startup investments. Six months later, the Israeli decamped to Singapore, saying the world’s largest copper producer was too addicted to its commodity wealth.

Kohavi’s tale may serve as a warning to the rest of South America, which has done little to reduce its dependence on raw materials during the past decade’s boom, said Colombia’s Mining Minister Mauricio Cardenas. The failure to boost productivity, and tackle longstanding gaps in education and infrastructure, make the region more vulnerable to a global slowdown should demand for its soy, copper and iron-ore exports decline.