The Chilean economy has, since the early 20th century, been controlled by the production of copper. Since the 1940s the industrial area has expanded rapidly, largely due to government efforts at diversification. Today Chile is one of the leading industrial nations in Latin America as well as one of its largest mineral producers. In the 1970s efforts were made to promote the output of the neglected agricultural area and to reduce the nation’s dependence on imported food; after a slow-down in the production of major crops in the early 1980s, agricultural output improved later in the decade. The Chilean economy is based on the development of agricultural, fishing, forest, and mining resources. Chile developed historically on the basis of a few agricultural and mineral exports, as was common in Latin America. Although there have been land reforms and development of manufacturing, many of Chile's economic problems in the 20th century are related to the nation's early economic structure.

Chile has a market-oriented economy characterized by a high level of foreign trade. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8.2% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the recession in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. Despite the effects of the recession, Chile maintained its reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. By the end of 1999, exports and economic activity had begun to recover, and growth rebounced to 5.5% in 2000. Unemployment remains stubbornly high, putting pressure on President LAGOS to improve living standards.