The economy of Chile is ranked as an upper-middle income economy by the World Bank, and is one of South America's most stable and prosperous nations, leading Latin American nations in human development, competitiveness, income per capita, globalization, economic freedom, and low perception of corruption. However, it has a high economic inequality, as measured by the Gini index.

In May 2010 Chile became the first South American country to join the OECD. In 2006, Chile became the country with the highest nominal GDP per capita in Latin America. Chile has an inequality-adjusted human development index of 0.652, compared to 0.654, 0.641 and 0.519 for neighbouring Uruguay, Argentina and Brazil, respectively. 5.3% of the population lives on less than US $2 a day.

The Global Competitiveness Report for 2009-2010 ranks Chile as being the 30th most competitive country in the world and the first in Latin America, well above from Brazil (56th), Mexico (60th) and Argentina which ranks 85th. The Ease of doing business index created by the World Bank lists Chile as 43rd in the world that encompasses better, usually simpler, regulations for businesses and stronger protections of property rights.The privatized national pension system (AFP) has encouraged domestic investment and contributed to an estimated total domestic savings rate of approximately 21% of GDP.

Chile (ⁱ/ˈtʃɪliː/ or /ˈtʃɪleɪ/), officially the Republic of Chile (Spanish: República de Chile [reˈpuβlika ðe ˈtʃile] ( listen)), is a country in South America occupying a long, narrow strip of land between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far south. Along with Ecuador, it is one of two countries in South America that do not border Brazil. Chilean territory includes the Pacific islands of Juan Fernández, Salas y Gómez, Desventuradas and Easter Island. Chile also claims about 1,250,000 square kilometres (480,000 sq mi) of Antarctica, although all claims are suspended under the Antarctic Treaty.

Chile's distinctive shape—4,300 kilometres (2,700 mi) long and on average 175 kilometres (109 mi) wide—makes it the longest country in the world, north to south, with the fifth lengthiest coastline at over 78 thousand kilometers. The diverse climate of Chile ranges from the world's driest desert in the north—the Atacama—through a Mediterranean climate in the centre, humid subtropical in Easter Island, to an Oceanic climate, including alpine tundra and glaciers in the east and south. The northern desert contains great mineral wealth, principally copper. The relatively small central area dominates in terms of population and agricultural resources, and is the cultural and political center from which Chile expanded in the late 19th century when it incorporated its northern and southern regions. Southern Chile is rich in forests and grazing lands, and features a string of volcanoes and lakes. The southern coast is a labyrinth of fjords, inlets, canals, twisting peninsulas, and islands.

Milton Friedman (July 31, 1912 – November 16, 2006) was an American economist, statistician, and author who taught at the University of Chicago for more than three decades. He was a recipient of the Nobel Memorial Prize in Economic Sciences, and is known for his research on consumption analysis, monetary history and theory, and the complexity of stabilization policy. As a leader of the Chicago school of economics, he influenced the research agenda of the economics profession. A survey of economists ranked Friedman as the second most popular economist of the twentieth century behind John Maynard Keynes, and The Economist described him as "the most influential economist of the second half of the 20th century…possibly of all of it."

Friedman's challenges to what he later called "naive Keynesian" (as opposed to New Keynesian) theory began with his 1950s reinterpretation of the consumption function, and he became the main advocate opposing activist Keynesian government policies. In the late 1960s he described his own approach (along with all of mainstream economics) as using "Keynesian language and apparatus" yet rejecting its "initial" conclusions. During the 1960s he promoted an alternative macroeconomic policy known as "monetarism". He theorized there existed a "natural" rate of unemployment, and argued that governments could increase employment above this rate (e.g., by increasing aggregate demand) only at the risk of causing inflation to accelerate. He argued that the Phillips curve was not stable and predicted what would come to be known as stagflation. Friedman argued that, given the existence of the Federal Reserve, a constant small expansion of the money supply was the only wise policy.