Investment for the Future

Suppose you won the lottery. What would you do with the money? Countries have faced similar questions. The most common example is a price commodity boom. A country exports a great deal of petroleum or copper or similar commodities. The price of this commodity zooms; the country’s revenues do as well. From Caracas to Lagos to Moscow and Tehran, governments whose countries have benefited from commodity price booms have rarely spent such a bonanza well. Chile witnessed a commodity price boom during this past decade, and it has set an admirable example for others.

International copper prices rose markedly earlier in this decade. Instead of spending the funds on projects of near-term political value, Chile’s President Michelle Bachelet and Finance Minister Andrés Velasco (the latter on leave from the Kennedy School) took the lead to create an investment fund that would not be tapped for ongoing operational expenses. The fund could be used to help the Chilean economy avoid an economic collapse; when the worldwide financial crisis broke out 18 months ago, the Chilean government was ready with a countercyclical budget—it spent to cushion the downturn and reactivate the economy.

A second important decision of the Bachelet government was to invest billions from this fund in the development of the skills and capacities of its people. On September 3, 2008, the Bachelet administration established procedures for its Bicentennial System to Train Advanced Human Capital Abroad (“bicentennial” because it marks Chile’s declaration of independence in 1810). This program, known as “Becas Chile,” is on scholarships.

On September 16, 2009, Harvard University and the Republic of Chile signed an agreement to facilitate the enrollment of master’s and doctoral students in Harvard Schools of Public Health, Education, Design, Government, Medicine, and Arts and Sciences. Master’s scholarships would be for up to two years and PhD and other doctorate fellowships for up to four years, to be supplemented through teaching fellow appointments in the Faculty of Arts and Sciences. There would also be funds for postdoctoral fellows as well as special students. Students are allowed to take longer to complete their doctorate, though with funds from other sources.

Chilean students will apply directly to the pertinent Harvard program and be accepted according to normal Harvard admissions procedures. The Chilean Ministry of Education through Becas Chile would then award scholarships to the Chileans whom Harvard would have admitted. The Chilean national science foundation, “CONICYT,” will implement the merit-based Chilean selection process. There is no Chilean government cap on the number of students that it could fund at Harvard; the number will depend on how many Chileans Harvard admits. The Chilean government will award fellowships based on financial- need guidelines that follow those of Harvard’s Committee on General Scholarships.

The Chilean government has designed a particularly thoughtful program. The fellowships cover round-trip airfares, tuition, a monthly living allowance, insurance, and an additional yearly allowance for books and pertinent materials. The fellowship provides a monthly allowance for a spouse and for each child as well as for the costs of first moving to the Boston area. Most importantly, the Chilean government will also provide English-language training in Chile to prepare students for their study abroad. Bright, hard-working Chilean students from poorer families may lack sufficient competence in English; language instruction is designed to increase the likelihood of more socially egalitarian access to these scholarships and thus to a Harvard degree.

The agreement commits both parties to “do their best efforts” to send and receive at least 50 participants per year. In academic year 2008-2009, there were 27 Chilean passport holders enrolled at Harvard who required a visa to enter the U.S. Absent this new fellowship program, Harvard expected 25-30 Chileans to be enrolled. In effect, the agreement calls for doubling the number of Chileans at Harvard. Of the 27 Chileans at Harvard as of last full count, 14 were in the Graduate School of Arts and Sciences, which is also the likeliest future beneficiary of the new agreement. If Chile and Harvard succeed in also enrolling students in schools such as Education, Design, and Public Health, as the agreement proposes, that would be especially welcome because, in 2008-2009, there were no Chileans in degree programs at Harvard in Education or Public Health and only one in the Design School.

At the recent signing ceremony, Chilean Finance Minister Andrés Velasco noted his view about good long-term macroeconomic forecasting: Look around a Harvard PhD classroom. Countries with students in such classes are a good indicator of good performance 10 to 20 years ahead. In the Harvard of 20 years ago, that would have led to forecasting that China and South Korea would perform well. The forecast for Chile already looks good, and it should be better. Neither Chile nor Harvard won the lottery, but, together, we are doing something better—not relying on chance but investing in some of the brightest and hardest-working young people to learn and generate knowledge and, in so doing, to help create a better world.

Jorge I. Domínguez is the Antonio Madero Professor of Mexican and Latin American Politics and Economics, Vice-Provost for International Affairs, and Special Adviser to the FAS Dean for International Studies.