One country in a celebratory mood this week is Chile.

It’s no wonder. Scenes of the flawless miner rescue there have brought the country together and given the world one the most heartwarming good news stories all year.

Some are even taking it to a higher level. “This is a miracle from God,” said Alberto Avalos, the first of the 33 miners to be hoisted to safety.

It’s not only the miners and their families that are celebrating. Yesterday, as images of the rescued miners filled the nation’s television screens and newspaper front pages, the iShares MSCI Chile Investable Market ETF (NYSE:ECH) jumped nearly 3%.

Chile is definitely a country on my radar. Year-to-date, ECH, which tracks the performance of 30 of Chile’s top companies, has risen by almost 34%, as you can see from the chart above. (Meanwhile, the S&P 500 has risen by just over 5%.)

Chile is one of those overlooked markets. It’s constantly being overshadowed by its bigger, brasher Latin American neighbor Brazil.

Yet Chile has a lot going for it:

• It’s the world’s biggest copper producer

• It has Latin America’s highest GDP per capita

• It has Latin America’s lowest corruption levels

• It is a stable democracy with very little social friction

• It has an extremely low level of debt as a proportion of GDP – just 6.1%.

But Chile has something else going for it that makes it, for my money, one of the best long-term investment destinations in the world right now: it’s one of the world’s most economically free countries.

The Golden Key to Emerging Markets Investing Success
The late Sir John Templeton was a pioneer in the overseas investing field and one of the most successful investors of all time. His flagship Templeton Growth Fund posted a 13.8% annualized average return from 1954 to 2004, well ahead of the Standard & Poor’s 11.1%, making him a billionaire in the process.

Templeton’s best known for his view that “the time of maximum pessimism” is the best time to buy and the best time to sell is the “time of maximum optimism.”

But he was also a great believer in investing in the freest markets possible. In other words: avoiding investing in countries with high levels of regulation and state interference in the economy.

This is what transforms Chile from just another emerging market opportunity to a great long-term holding in any global portfolio.

Chile is not only the most economically free country in Latin America, it also ranks #10 in the Heritage Foundations 2010 Index of Economic Freedom. (It ranks after places such as Hong Kong, Singapore, Switzerland, Canada, the U.S. and Denmark.)

According to the Heritage Foundation:

Openness to global trade and investment and a dynamic private sector have facilitated steady economic growth. Chile has pursued free trade agreements with countries around the world. The financial sector is diversified and stable compared to other regional economies, and prudent lending and regulations have allowed the banking sector to withstand the global financial crisis with little disruption.

I believe Chile’s new president, Sebastián Piñera, will continue to lead Chile as a proud free-market economy and promote Chile to the world as a great free-market place to invest.

The 61-year-old billionaire is Chile’s third-richest citizen and was one of Latin America’s most successful businessmen before taking office. (He introduced credit cards to the country in the 1970s and bought large amounts of stock in Chile’s LAN Airlines.)

He took office just 13 days after the earthquake that devastated much of the country in February. And in my view he handled the emergency admirably.

Although the quake destroyed one-third of Chile’s schools, Piñera’s government was able to put all of the displaced students back in school after just 45 days. In 90 days, bridges, ports and airports reopened.

His handling of the rescue of the miners was equally skillful.

This obvious capability, combined with Piñera’s free-market credentials, is sure to boost investor confidence in Chile…and help put it on investors’ maps.

A word of warning: Chile’s economy is highly dependent on the price of copper. Right now, copper prices are on a tear. The metal just hit a 27-month high on the London Stock Exchange today.

Chile is a great long-term buy. But I’d wait to see how copper fares over the short-term before taking a stake. A correction in copper could signal a better entry point into the Chilean market.