could have significant effects on the prices of global financial assets and commodities. another important risk, which has gained importance in recent days, relates to the announced protectionist policies that may affect global trade. beyond the short - term effects, such measures would negatively affect the world economy's and chile's trend growth. domestically, the board estimates that the risks to activity are upwards biased. the outlook for 2018 shows investment growing in line with gdp. however, it may prove more dynamic, considering the favorable external scenario, the expansionary nature of monetary policy, improved confidence indicators and the data of recent months. this risk is tempered in part because the stagnant creation of private salaried jobs and weaker growth in nominal wages continue to be causes for concern. in any case, different surveys show that the companies have improved their prospects for employment and investment in recent months, reflecting their better growth expectations ( figure 10 ). about inflation, the board estimates that risks are unbiased. the threats to its convergence to 3 % are milder, primarily due to the way the improved economic outlook affects the closure of capacity gaps. however, the evolution of the exchange rate over the coming months will pull inflation down below the december expectations, a situation that the board will continue to monitor with special care, given that it could have negative implications on the convergence of inflation to the target in the policy horizon. in short, as i noted at the beginning, this report clearly shows a turning point in the business cycle that translates into an upward revision of the growth projections for 2018, giving way to lower risks for both activity and inflation. anyway, in the baseline scenario that we have just presented, we consider that the risks for inflation and an economy that has yet to consolidate its greater dynamism make it necessary for the monetary stimulus to persist further. therefore, we will only begin to raise the mpr when we are certain that the process of inflation converging to 3 % is consolidating. the analysis of external risks contained in this report reminds us of the importance of the exchange rate being the first buffer of external shocks, causing the economy to respond through changes in relative prices rather than the levels of demand and activity. additional evidence presented in this report shows that countries with a floating exchange rate also reduce the volatility of long - term interest rates, which are a determinant of investment. moreover, developing market instruments to manage foreign exchange risk generates a stronger basis for the development and diversification

in 1970. on comparative advantages, but it also induces better practices and technologies, as well as more competition in the markets, all factors that enhance economic growth. on the other hand, we know that chile is rich in natural resources, especially mining ores, but our dependence on them is ever smaller. actually, mining exports contribute every year a large amount of resources to the country, but their share of total exports has steadily declined over time, with the exception of the last few years due to the soaring price of copper ( figure 3 ). another critical element mentioned in the literature, that for chile is a strong one, is the quality of its institutions. sound institutions, including fiscal discipline, have prevented the “ voracity ” effects. a well educated labor force and full access to international capital markets have kept investments in other activities free of barriers, and the real exchange rate, although widely fluctuating, has not been detrimental to the development of the exporting sector. by way of example, and to see the good position we are in now as compared with previous years, let us recall what happened with nitrate. as we all know, there was a “ golden era ” for nitrate between the years 1880 and 1930, where thanks to our resources and the external demand, chile increased strongly its international trade, obtained large amounts of fiscal resources and was able to take a leap forward. our economy ’ s nitrate dependence is visible in the proportion of fiscal resources that came from this sector ( figure 4 ). this is the typical case where high earnings coming from natural resources create incentives to reduce the other taxes, placing the economy in great fiscal vulnerability, as it later occurred. thus, when the golden era ended, the public external debt skyrocketed ( from 28 % of gdp in 1929 to 221 % in 1932 ) and the economy suffered a severe contraction ( figure 5 ), which was also fostered by the great depression. we can also see the negative effects of natural resource dependence if we compare the behaviors of nitrate, copper, and output. the fluctuations of nitrate output value had an enormous effect on gdp, with a correlation of 0. 66 ( figure 6 ). this is quite different nowadays, with a correlation between growth in copper output value and gdp of 0. 05 ( figure 7 ). summing up, the review of the international evidence allow us to state that our abundant copper has been a positive contribution to the chilean economic growth and welfare, which is reinforced by institutional and