Over the past two decades many Latin American countries have embraced free market economies, and, though a few left wingers still cling to power, most notably in Venezuela and Bolivia, authoritarian dictators have fallen like dominoes.

This political maturity helped the region weather the financial crisis in better form than many of its developed-nation peers.

Latin America’s gross domestic product (GDP) shrank an estimated 3.6 percent in 2009 after many governments in the region enacted conservative stimulus programs to repair their economies.

Latin America’s economy is expected to grow in the neighborhood of 5 percent this year. More rapid growth is likely if commodity prices continue to rebound, as the region’s major economies are based on resources.

Although the 21st century has been good to the region in general, Peru and Chile stand above the pack.

Peru, plagued by authoritarian governments and rebel insurgencies for decades, was once one of the most volatile countries in the region. Its last two governments were reliably moderate and pro-business.

This political maturation enabled the economy to achieve one of the world’s fastest growth rates last year, 9.8 percent. Rising commodity prices also helped the country withstand the pressures of the financial crisis.

Peru sustained an average annual growth rate of 7 percent over the last decade; per capita income has doubled, and the country’s poverty rate is down from 50 percent to just 35 percent. This rapid growth is expected to continue on the strength of Chinese demand for Peruvian raw materials.

Completion of the South American equivalent of Asia’s Silk Road will also drive growth. The Interoceanica Sur Road will connect Brazil to the Peruvian Pacific coast and will likely siphon some shipping traffic away from the Panama Canal.

Chile shares a similar back story: It’s resource-rich and politically stable. Chile, however, also boasts a long track record of fiscal conservatism.

Unlike other resource-rich nations that went on spending sprees during the recent commodities boom, Chile set money aside in a rainy day fund. This proved a smart move; when the time came for authorities to implement a stimulus program it amounted to just over 3 percent of GDP. The Central Bank of Chile financed much of the spending on its own and added a little over 1 percent to the country’s national debt.

Compania de Minas Buenaventura (NYSE: BVN), which has operated in Peru since 1953, is one of the oldest mining outfits in the region and boasts extensive knowledge of Peru’s mineral resources–a sizable advantage for a mining company operating in the seventh-largest gold producing country in the world.

Buenaventura is one of the largest gold and silver miners in the world, and precious metals account for almost three quarters of revenue. But the company has steadily increased production of tin, copper and other base metals to meet rising Asian demand for industrial metals.

Buenaventura operates three gold and silver mines and is involved in several other joint ventures. Its assets include 43 percent stake in Yanacocha, the largest gold mine in South America. Buenaventura is also one of the lowest-cost producers in the world.

Revenue growth has averaged better than 30 percent a year, though 2010 will likely be choppier because the company recently unwound its entire hedge book; it’s now much more exposed to swings in gold prices.

But gold demand should spike in 2010, and the miner is working to improve its metals mix over the coming year, which should cushion any volume shock to a single metal.

Empresa Nacional de Electricidad (NYSE: EOC) was privatized in the 1980s when Chile began selling off its nationalized assets. Since then Empresa has grown to be the largest electricity generator in Chile–it’s more than two times the size of its two closest competitors. In addition to its Chilean presence, Empresa also has operations in Argentina, Brazil, Columbia and Peru.

The power company generates strong free cash flow of more than CLP576,000, and the gap between its cost of capital and return on capital has narrowed steadily in recent years.

Relying primarily on hydroelectric generation, the company enjoys a leg up on many of its competitors that emphasize thermal generation because of geographic considerations. Regional politics also recently worked to Empresa’s advantage: The Argentine government decided to curtail natural gas exports, which will certainly increase the cost of gas generated electricity. This development has driven many investors to the sidelines on the assumption that Empresa will take a hit on costs.

Although the move will impact the company’s bottom line, the long-term effects won’t be as significant as many observers believe. Only about a third of Empresa’s energy is generated from natural gas, a ratio that compares favorably with competitors who use it to generate as much as half of their supply. Empresa should retain its cost advantage even as electricity demand in the country grows at an annual pace of around 6 percent.

Lan Airlines (NYSE: LFL) is a Chile-based carrier that combines cargo and passenger operations. Although it does have a dedicated cargo fleet, Lan also utilizes hold space in its passenger aircraft to transport cargo.

This strategy provides a relatively stable revenue stream; Lan can generate the same amount of revenue per flight even when it fills fewer passenger seats. On passenger flights that also carry cargo, only 65 percent of seats need to be filled for Lan to break even. This allows Lan to undercut its competition–the main reason it claims 82 percent of Chilean passenger and cargo traffic.

Nevertheless, the global economic and financial crisis put a dent in Lan’s business. Passenger traffic increased only 11 percent in 2009, a substantial drop from the high-double-digit growth it historically generates. But even 11 percent growth was a far cry from the 7 percent decline averaged by the industry.

Business travel has grown rapidly along with Chile’s vibrant economy, and the country is increasingly becoming an international tourist destination. More than 70 percent of international tourists arrive in the country on a Lan flight.