Chile has a dynamic 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% during the period 1991-1997, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. Chile's economy has since recovered and has seen growth rates of 5-7% over the past several years. In 2006, Chile became the country with the highest nominal GDP per capita in Latin America. Even though the exceptional Chilean economic results, its unequal income distribution remains a major challenge for the current and future administrations. Chile ranks 80th among the countries on the list of income distribution.
The Global Competitiveness Report for 2007-2008 ranks Chile as being the 26th most competitive country in the world and the first in Latin America, well above from Mexico (52nd), Brazil (72nd) and Argentina which ranks 85th. The Ease of doing business index created by the World Bank lists Chile as 33rd in the world that encompasses better, usually simpler, regulations for businesses and stronger protections of property rights. The OECD agreed to invite Chile to be among four countries to open discussions in becoming an official member.
Chile's economy is highly dependent on international trade. In 2006, exports increased to $59.0 billion from $40.5 billion in 2005, and imports increased to $36.7 billion from $30.2 billion the previous year. Exports accounted for about 42% of GDP. Chile has traditionally been dependent upon copper exports; the state-owned firm CODELCO is the world's largest copper-producing company. Foreign private investment has developed many new mines, and the private sector now produces more copper than CODELCO. Copper output continued to increase in 2000. Non-traditional exports have grown faster than those of copper and other minerals. In 1975, non-mineral exports made up just over 30% of total exports, whereas now they account for about 60%. The most important non-mineral exports are forestry and wood products, fresh fruit and processed food, fishmeal and seafood, and other manufactured products.
Chile's export markets are fairly balanced among Europe, Asia, South America, and North America. The U.S., the largest-single market, takes in 17% of Chile's exports. Latin America has been the fastest-growing export market in recent years. The government actively seeks to promote Chile's exports globally, and since 2004 has had the US-Chile Free Trade Agreement in place. Since 1991, Chile has signed several bilateral free trade agreements, including Canada, Mexico, South Korea, USA, the People's Republic of China, the CACM nations (Costa Rica, El Salvador, Honduras, Guatemala, Nicaragua), the EFTA and the European Union and has recently entered into the Trans-Pacific Strategic Economic Partnership which is a multilateral free trade agreement with New Zealand, Singapore and Brunei. Chile has also recently signed a free trade agreement with Japan. This means that Chile has free-trade access to over half of the world's GDP. Chile intends to negotiate further agreements with countries such as India. Also, Chile is member (in different degrees) of many international economical instances, like APEC, WTO, Mercosur. Such diversity of relations prevents the Chilean economy from being exclusively dependent of any major partner and thus provides stability.
After growing for several years, imports were down in 1998 and 1999, reflecting reduced consumer demand and deferred investment. Imports have rebounded in 2000 and are up 19% over 1999; capital goods make up about 22% of total imports. The United States is Chile's largest-single supplier, supplying 18.5% of the country's imports in 2000, down from 21% in 1999. Chile unilaterally is lowering its across-the-board import tariff--for all countries with which it does not have a trade agreement--by a percentage point each year until it reaches 6% in 2003. Higher effective tariffs are charged only on imports of wheat, wheat flour, vegetable oils, and sugar as a result of a system of import price bands.