Most of Chile's gross domestic product (GDP) is accounted for by service industries and manufacturing. However, mining has a very significant role in the economy of Chile than in the economies of most other countries. Copper is its most valuable resource and export. Many other industries of Chile are dependent on the country's mineral production.Until well into the 20th century, Chile depended largely on farming and mining. Now it has one of the more advanced economies in Latin America, primarily because of the growth in manufacturing since the early 20th century. The economy has long been troubled, however, by rapid inflation, a huge foreign debt, dependence on international credit, and social and political unrest.
During 1970-73, when Chile had a Marxist government, many of the nation's industrial, banking, mining, farming, and other enterprises were nationalized. Upon taking control in 1973, a military government announced a policy of denationalization. The government retained control of some activities, such as oil production and refining, and exercised regulatory powers. The dramatic changes in economic policies in the the late 20th century caused many economic problems, including widespread unemployment and a rapid rise in the rate of inflation. The economy recovered during the late 20th century.
Chile's middle class, most of which lives in urban areas, especially Santiago, is small but growing. Great differences in income exist between the professional and skilled urban workers and rural inhabitants, many of whom live at a subsistence level.
Chile's basic currency unit is the Chilean peso.
Service industries make up almost half of Chile's GDP and employ more than half of the country's workers. Businesses that engage in trade, including stores and restaurants employ many service workers. Government agencies, banks, health care facilities, and social service organizations also employ many Chileans. Other sources of employment for service workers in Chile are in industries such as transportation and communication and in such professions as teaching and law.
The manufacturing industries of Chile constitute approximately one-sixth of the country's GDP and provide jobs for about one-seventh of the nation's workers. The food-processing and textile industries are the oldest, largest, and most highly developed. Also important are iron and steel, cement, copper, pulp and paper, chemicals, motor vehicles and parts, and electric appliances. Santiago and its many suburbs form the principal industrial area. Other sizable manufacturing centers include Concepcion, with the nearby steel city of Huachipato; Valparaiso; and Valdivia.. Consumer products such as beverages, clothing, processed foods, textiles, and wood products are also produced by most Chilean factories.
About 25 per cent of Chile's land is used for growing crops or raising livestock. The cultivated land consists of only 3 per cent; hence Chile is unable to meet the food needs of its people entirely. Obsolete farming methods have also constricted Chile's agricultural harvest. Agriculture employs about 13 per cent of the workers and makes up about a third of the nation's GDP. Fruit, which makes up most of Chile's agricultural exports, is an especially important crop and wheat is also a valuable crop.
Most of the land under cultivation lies in central Chile, particularly in the fertile, highly irrigated Central Valley. Crops produced include fruits, wheat, potatoes, tomatoes, beans, sugar beets, corn, rice, barley, oats, and onions. Grapes, used mainly for making wine, are grown in vineyards between Santiago and Concepcion. Other fruits grown are apples, citrus fruits and peaches. Cattle are raised in the central region, as well as chickens and hogs. Sheep production is a major economic activity of the southern provinces.
Most of Chile's farmland was under the control of a few wealthy landowners until the mid 20th century. However, a rural reform movement in the late 20th century led to the division of large estates and today, most land is controlled by small farmers or large corporations. Less than 25 acres (10 hectares) of land is covered by most of Chile's farms. Poverty prevents small farmers from using modern, technological equipment to work their land. Nevertheless, corporate farm production is on the rise. Fruits and vegetables grown by many corporate farms are exported to Europe and North America during their winters.
Chile is rich in minerals. Metals, especially copper, make up a large percentage of the nation's exports. In the northern and central parts of the country, mainly in the Andes and their foothills, lie some of the world's most extensive copper ore deposits. Chile possesses about one third of the world's known copper reserves and is ranked as the world's leading copper-producing country. One of the largest open-pit copper mines in the world is Chuquicamata in the Atacama Desert., Southeast of Santiago is situated El Teniente, the world's largest underground copper mine. Other metals and ores mined include iron ore, manganese, molybdenum, zinc, silver, and gold. Chile is also a producer of natural gas, petroleum, iodine and lithium. It also leads in the production of molybdenum.
Nitrate mining was a major industry in Chile until about 1930, when synthetic nitrates captured much of the market. Some nitrate deposits are still worked. Chile's production of mineral fuels provides a large share of its domestic requirements. Almost all of the petroleum and natural gas come from Tierra del Fuego and nearby offshore sites. Coal is mined in the central part of the country, near Concepcion; and in the south, near Punta Arenas.
Lumbering and the forest-products industry contribute significantly to Chile's economy. Much of the woodland, however, remains unused, mostly because of its inaccessibility to commercial loggers. Insignis pine, or Monterey pine, accounts for a large part of all timber production. Forest products include lumber, pulp and paper, and veneers.
Chile has one of the world's largest fishing industries which yield an annual catch of 5 million tons (4.5 million metric tons) of fish and shellfish. Many kinds of fish and shellfish abound off the north coast and provide the basis for Chile's fishing industry, which is one of the largest in Latin America. Pacific mackerel makes up most of the catch, as well as anchovettas, jack mackerel and sardines. Exports from the fishing industry include fish oil and fish meal, and also fresh fish such as salmon and bass which are raised on fish farms in the southern part of the country. They export mainly to Europe, Japan and North America.
Virtually all of Chile's surface transportation facilities are in the central and northern provinces. Overland routes in the south are virtually nonexistent, primarily because of the scant population and difficult terrain. The Pan American Highway runs southward from Peru to central Chile, where it turns eastward to cross the Andes into Argentina. Most of the other roads are unpaved. Railways link the larger cities from Iquique in the north to Puerto Montt in the south.
Valparaiso is the chief seaport; others are Antofagasta, Coquimbo, Talcahuano, Puerto Montt, and Punta Arenas. There is much coastal shipping. None of the rivers is navigable for more than a short distance.
Airplanes are a common means of travel within Chile. The major airlines, state-owned Linea Aerea Nacional de Chile (LAN), provides international as well as domestic service. Santiago's airport, served by a number of foreign airlines, is the largest and busiest in the nation.