Glossary -- Chile
- Alliance for Progress
- Established in 1961 at a hemispheric meeting in Punta del Este,
Uruguay, under the leadership of President John F. Kennedy as a
long-range program to help develop and modernize Latin American
states through multisectoral reforms, particularly in health and
education. Involved various forms of foreign aid, including
development loans offered at very low or zero interest rates, from
the United States to all states of Latin America and the Caribbean,
- Andean Group
- An economic group, also known as the Andean Pact or the Andean
Common Market, created in 1969 by Bolivia, Chile, Colombia,
Ecuador, and Peru (Venezuela joined in 1973) as a subregional
market to improve its members' bargaining power within the Latin
American Free Trade Association (LAFTA--q.v.). Its
commission meets three times a year to encourage increased trade
and more rapid development and to plan and program economic
subregional integration. Chile left the Andean Pact in 1976.
- Andean Pact
- (q.v. Andean Group).
- A high court of justice, exercising some administrative and
executive functions in the colonial period.
- balance of payments
- An annual statistical summary of the monetary value of all
economic transactions between one country and the rest of the
world, including goods, services, income on investments, and other
financial matters, such as credits or loans.
- binomial electoral system
- In this unique majority system, which governs Chile's
congressional elections, political parties or groupings form pacts
and permit slates (two candidates per slate), from which two
senators and two deputies are elected from each district. By
requiring each party to obtain two-thirds of the vote in each
district for the successful election of its two candiddates to the
legislature, this system gives the opposition disproporationate
representation in Congress
- capital account
- A section of the balance of payments accounts that records
short-term and long-term capital flows.
- capital formation
- Creation of new capital or the expansion of existing capital,
during a fiscal period, normally financed by savings.
- capital goods
- A factor-of-production category consisting of manufactured
products used in the process of production.
- capital-intensive production
- A high ratio of capital to labor and other resources used in
the production process.
- capital market
- An institutional system of communications, vested largely in
the security exchanges, where lenders and borrowers interact with
a view to transacting or trading.
- Central Bank
- Usually a federal government-related institution that is
entrusted with control of the commercial banking system and with
the issuance of the currency. Responsible for setting the level of
credit and money supply in an economy and serving as the bank of
last resort for other banks. Also has a major impact on interest
rates, inflation, and economic output. Under Article 97 of the
constitution, the Central Bank of Chile is an autonomous body.
- "Chicago boys"
- A pejorative expression coined in the early years of the
Pinochet regime to refer to those University of Chicago-trained or
affiliated economists, including Milton Friedman and Arnold
Harberger, who recommended and implemented the liberalization and
stabilization policies of the military government. However, because
many other respected economists have since advocated free-market
policies, the term has become misleading. Furthermore, economist
David E. Hojman has pointed out that the model advocated by the
"Chicago boys" characterized Chilean policy-making for many
decades, and thus was not particularly extraneous to Chilean
institutions and traditions.
- Chilean peso
- (Ch$) Chile's currency. Replaced escudo on September 29, 1975,
at a rate of 1,000 escudos per peso. Peso notes are for 500, 1,000,
5,000, and 10,000 pesos; coins are for 1, 5, 10, 50, and 100 pesos.
Official exchange rate of Chilean peso was pegged to United States
dollar until July 3, 1992, at a rate adjusted at daily intervals
and determined by monthly rates of national and world inflation. On
January 26, 1992, the Central Bank (q.v.) revalued the
peso, reducing the official dollar exchange rate by 5 percent,
which meant it dropped from 395 to 375 pesos. On July 3, 1992, the
Central Bank, in a move designed to halt currency speculation,
announced the peso would no longer be measured exclusively against
the United States currency, but rather would use a basket of the
dollar, the German mark, and the Japanese yen in a 50-30-20 ratio.
- Christian Base Communities (Comunidades
Eclesiales de Base--CEBs)
- Groups consisting of mostly poor Christian lay people through
which advocates of liberation theology (q.v.) mainly work.
Members of CEBs meet in small groups to reflect on Scripture and
discuss the Bible's meaning in their lives. They are introduced to
a radical interpretation of the Bible, one employing Marxist
terminology to analyze and condemn the wide disparities between the
wealthy elite and the impoverished masses in most underdeveloped
countries. This reflection often leads members to organize and
improve their living standards through cooperatives and civic-
- The Russian Communist Party founded the Communist International
(Comintern) in Moscow in March 1919 for the purpose of rallying
left-wing socialists and communists. Comintern adopted Leninist
principles and rejected reformism in favor of revolutionary action
against capitalist governments. Disbanded in May 1943 and replaced
by the Cominform (Communist Information Bureau) in 1947.
- The Christian Democrats supported unionization of the peasantry
through communitarianism rather than Marxism. According to
political scientist Paul E. Sigmund, whereas in the early decades
of their party Chile's Christian Democrats preferred to describe
their program simply as communitarian instead of as socialist,
after the election of Salvador Allende Gossens as president in 1970
they described it as "communitarian socialism," as opposed to
Allende's statist socialism.
- consumer price index (CPI)
- A statistical measure of sustained change in the price level
weighted according to spending patterns.
- A sociopolitical philosophy that is antithetical to both
Marxist and liberal democratic political ideals. It found its most
developed expression in Italy under Benito Mussolini. A corporatist
would organize society into industrial and professional
corporations that serve as organs of political representation
within a hierarchical, centralized polity controlled by the state.
A corporatist society is elitist, patrimonialist, authoritarian,
and statist. Some social science theorists have argued that Latin
political tradition has had a fundamental corporatist feature, but
others argue that it is but one of many cultural influences in the
- Economic Commission for Latin America
- q.v. Economic Commission for Latin America and the
- Economic Commission for Latin America
and the Caribbean (ECLAC)
- A United Nations regional economic commission established on
February 25, 1948, as the Economic Commission for Latin America
(ECLA). More commonly known in Latin America as Comisión Económica
para América Latina (CEPAL). In 1984 expanded its operations and
title to include the Caribbean. Main functions are to initiate and
coordinate policies aimed at promoting economic development. In
addition to the countries of Latin America and the Caribbean,
ECLAC's forty-one members in 1992 included Britain, Canada, France,
the Netherlands, Portugal, Spain, and the United States. There were
an additional five Caribbean associate members.
- Colonial grantees, usually large landowners, to rights over
native American labor and tribute in exchange for assuming
responsibility to protect and Christianize these native subjects.
- A system or legal arrangement adopted in 1503 whereby the
Spanish crown assigned rights over native American labor and
tribute in the Spanish American colonies to individual colonists
(encomenderos) in return for protecting and Christianizing
their subjects. However, most native Americans ended up as virtual
slaves with no recognized rights. Not to be confused with the
landed estate (latifundio--q.v.), the system was not ended
until late in the eighteenth century.
- See Chilean peso.
- Term used in Chile to refer to all non-Catholic Christian
churches with the exception of the Orthodox (Greek, Persian,
Serbian, Armenian) and the Mormons. Most Evangelicals are
Pentecostal. Some would say "Protestant" refers to non-Pentecostal
churches of the Reformation, but they themselves (i.e., the
Methodists and Presbyterians) also identify with the term
"Evangelical." The 1992 census used both "Protestant" and
"Evangelical" to ask about religion, but the difference is
meaningless. Pastors of all denominations urged people to say they
- extreme poverty
- The Chilean government defines poor people as those who do not
earn enough to cover twice the cost of the canasta básica
(basic basket). The extremely poor are those who simply cannot buy
the canasta básica.
- Factor markets
- Producer goods markets in which factors of production--inputs
such as land, labor, capital, entrepreneurship, and other material
instruments used in production of goods and services--are procured.
- Gini coefficient
- A measure of inequality in a country's wealth distribution. It
contrasts actual income and property distribution with perfectly
equal distribution. The value of the coefficient, or index, can
vary from 0 (complete equality) to 1 (complete inequality).
- Great Depression
- The 1929-34 economic slump in North America and other
industrialized areas of the world. It was precipitated by the
collapse of the United States stock market in October 1929. The
term "depression" denotes, in its economic sense, a cyclical phase
of the economy with high unemployment of labor and capital,
business and consumer pessimism, accumulated inventories, minimal
investment, and, in some sectors, falling prices.
- gross domestic product (GDP)
- The broadest measure of the total value of goods and services
produced by the domestic economy during a given period, usually a
year. GDP has mainly displaced a similar measurement, the gross
national product (GNP--q.v.). GDP is obtained by adding
the value contributed by each sector of the economy in the form of
profits, compensation to employees, and depreciation (consumption
of capital). The income arising from investments and possessions
owned abroad is not included, hence the use of the word
domestic to distinguish GDP from GNP. Real GDP adjusts the
value of GDP to exclude the effects of price changes, allowing for
measurement of actual yearly increases or decreases in output.
- gross national product (GNP)
- Total market value of all final goods (those sold to the final
user) and services produced by an economy during a year, plus the
value of any net changes in inventories. Measured by adding the
gross domestic product (GDP--q.v.), net changes in
inventories, and the income received from abroad by residents less
payments remitted abroad to nonresidents.
- human development index (HDI)
- A measurement of human progress introduced by the United
Nations Development Programme (UNDP) in its Human Development
Report 1990. By combining indicators of real purchasing power,
education, and health, the HDI provides a more comprehensive
measure of development than does the GNP alone.
- import-substitution industrialization
- An economic development strategy and a form of protectionism
that emphasizes the growth of domestic industries by restricting
the importation of specific manufactured goods, often by using
tariff and nontariff measures, such as import quotas.
Theoretically, capital thus would be generated through savings of
foreign-exchange earnings. Proponents favor the export of
industrial goods over primary products and foreign-exchange
considerations. In the post-World War II period, import-
substitution industrialization was most prevalent in Latin America.
Its chief ideological proponents were the Argentine economist Raúl
Prebisch and the United Nations' Economic Commission for Latin
America (q.v.). Main weaknesses in Latin America: the
domestic markets in the region were generally too small; goods
manufactured domestically were too costly and noncompetitive in the
world market; most states in the region had an insufficient variety
of resources to build a domestic industry; and most were also too
dependent on foreign technology.
- Inter-American Treaty of Reciprocal
Assistance of 1947
- see Rio Treaty.
- International Monetary Fund
- Established on December 27, 1945, the IMF began operating on
March 1, 1947. The IMF is a specialized agency affiliated with the
United Nations that takes responsibility for stabilizing
international exchange rates and payments. The IMF's main business
is the provision of loans to its members when they experience
balance of payments difficulties. These loans often carry
conditions that require substantial internal economic adjustments
by the recipients. The IMF's capital resources comprise Special
Drawing Rights and currencies that the members pay under quotas
calculated for them when they join. These resources are
supplemented by borrowing. In 1993 the IMF had 167 members.
- International Telecommunications
Satellite Organization (Intelsat)
- Created in 1964 under a multilateral agreement, Intelsat is a
nonprofit cooperative of 116 countries that jointly own and operate
a global communications satellite system.
- Kennedy Amendment
- After evidence of severe repression by the military regime
following the overthrow of President Salvador Allende Gossens in
September 1973, the United States Congress in 1974 adopted the
Kennedy Amendment, prohibiting all security assistance and sales to
Chile. This restriction was made much more general in the
International Security Assistance and Arms Export Control Act of
1976, prohibiting transfers to any country "which engages in a
consistent pattern of gross violations of internationally
recognized human rights," except in extraordinary circumstances.
- Large landed estates held as private property, which may be
farmed as plantations, by tenant sharecroppers, or as traditional
haciendas. The latifundio system (latifundismo) is a
pattern of land ownership based on latifundios owned by local
gentry, absentee landlords, and domestic or foreign corporations.
- Latin American Free Trade Association
- A regional group founded by the Montevideo Treaty of 1960 to
increase trade and foster development. LAFTA's failure to make
meaningful progress in liberalizing trade among its members or to
move toward more extensive integration prompted the leaders of five
Andean states to meet in Bogotá in 1966. This meeting led to the
creation in 1969 of the Andean Group (q.v.)--consisting of
Bolivia, Chile, Colombia, Ecuador, and Peru (Venezuela joined in
1973)--to serve as a subregional structure within LAFTA. LAFTA was
replaced in 1980 by the Latin American Integration Association
(Asociación Latinoamericana de Integración--ALADI), which advocated
a regional tariff preference for goods originating in member
states. ALADI has since declined as a major Latin American
integration effort in favor of regional efforts, such as the
Southern Cone Common Market (q.v.).
- League of Nations
- An international organization whose covenant arose out of the
Paris Peace Conference in 1919. It was created for the purpose of
preserving international peace and security and promoting
disarmament by obligating nations to submit their conflicts to
arbitration, judicial settlement, or to the League Council for
consideration. The League contravened traditional principles of
neutrality and the right to employ force to resolve disputes. By
not signing the Treaty of Versailles, the United States refused to
join, but the organization had fifty-three members by 1923.
Although the League considered sixty-six disputes and conflicts
between 1920 and 1939, it proved ineffective against German,
Italian, Japanese, and Soviet aggression in the 1930s. Formally
disbanded in April 1946, its functions were transferred to the
- liberation theology
- An activist movement led by Roman Catholic clergy who trace
their inspiration to the Second Vatican Council (1962-65), when
some church procedures were liberalized, and the second meeting of
the Latin American Bishops' Conference (Conferencia Episcopal
Latinoamericana--CELAM) in Medellín (1968), which endorsed greater
direct efforts to improve the lot of the poor. Advocates of
liberation theology--sometimes referred to as "liberationists"--
work mainly through Christian Base Communities (q.v.).
- A concept used to explain the poor political, economic, and
social conditions of individuals within a society, social classes
within a nation, or nations within the larger world community.
Refers often to poverty-stricken groups left behind in the
modernization process. They are not integrated into the
socioeconomic system, and their relative poverty increases.
Marginality is sometimes referred to as dualism or the dual society
- Colonial system whereby the elder son inherited the titles and
properties of the family.
- Mercosur (Mercado Común del Cono Sur--
Southern Cone Common Market)
- An organization established on March 26, 1991, by Argentina,
Brazil, Paraguay, and Uruguay for the purpose of promoting regional
economic cooperation. Chile was conspicuously absent because of its
insistence that the other four countries first had to lower their
tariffs to the Chilean level before Chile could join. Mercosur
aimed to form a common market by December 31, 1994.
- Originally, term designated the offspring of a Spaniard and a
native American. It now means any obviously nonwhite individual who
is fluent in Spanish and observes Hispanic cultural norms.
- Advocates of monetarism, an economic policy based on the
control of a country's money supply. Monetarists assume that the
quantity of money in an economy determines its economic activity,
particularly its rate of inflation. A rapid increase in the money
supply creates rising prices, resulting in inflation. To curb
inflationary pressures, governments need to reduce the supply of
money and raise interest rates. Monetarists believe that
conservative monetary policies, by controlling inflation, will
increase export earnings and encourage foreign and domestic
investments. Monetarists have generally sought support for their
policies from the International Monetary Fund (q.v.), the
World Bank Group (q.v.), and private enterprise,
especially multinational corporations. The University of Chicago
economist Milton Friedman is considered to be a leading monetarist.
- North American Free Trade Agreement
- A free trade agreement comprising Canada, Mexico, and the
United States. Tripartite negotiations to form NAFTA began among
these countries in June 1991 and were concluded in August 1992. The
United States Congress finally ratified NAFTA in November 1993, and
the agreement went into effect on January 1, 1994. NAFTA was
expected to create a free trade area with a combined population of
356 million and a GDP (q.v.) of more than US$6 trillion.
Chile was expected to be incorporated into NAFTA as of January 1,
- Organisation for Economic
Cooperation and Development (OECD)
- A Paris-based organization of the European countries,
Australia, Canada, and the United States that promotes economic and
social welfare throughout the OECD area by assisting its member
governments in the formulation of policies designed to this end and
by coordinating these policies. It also helps coordinate its
members' efforts in favor of developing countries.
- Organization of American States
- Established by the Ninth International Conference of American
States held in Bogotá on April 30, 1948, and effective since
December 13, 1951, the OAS has served as a major regional
organization composed of thirty-five members, including most Latin
American states and the United States and Canada. Determines common
political, defense, economic, and social policies and provides for
coordination of various inter-American agencies. Responsible for
implementing the Inter-American Treaty of Reciprocal Assistance
(Rio Treaty) (q.v.), when any threat to the security of
the region arises.
- patronato real
- The "king's patronage" was the absolute control of clerical
patronage in the colonies that the papacy gave to the kings of
Spain. The Spanish Crown maintained this extensive power over the
church throughout the colonial period. It ended with independence,
when the church lost the protection of royal support.
- An eclectic Argentine political movement formed in 1945-46 to
support the successful presidential candidacy of Juan Domingo
Perón. The movement later splintered, with left-wingers forming the
Montoneros urban guerrilla group. Nevertheless, the fractious
movement survived Perón's death in 1974 and made a good showing in
the congressional elections of 1986. The political, economic, and
social ideology of Peronism was formally labelled Justicialismo,
meaning social justice, in 1949. It combines nationalism, social
democracy, loyalty to the memory of Perón, and Personalismo, which
is the dominance of a nation's political life by an individual,
often a charismatic personality.
- A device of direct democracy whereby the electorate can
pronounce, usually for or against, some measure put before it by a
government. Also known as a referendum. A Chilean president may
convoke a plebiscite, under Article 117, if the president totally
rejects an amendment project approved by Congress, but the latter
insists on the totality of the proposed law by three-fourths of the
members in office in each Chamber. Articles 118 through 119 further
specify the conditions under which a plebiscite may be held.
- "popular" sectors
- A term similar to popular culture, referring to the masses of
working-class, underemployed, and unemployed citizens.
- The theory that genuine knowledge is acquired by science and
that metaphysical speculation has no validity. Positivism, based
largely on the ideas of the French philosopher Auguste Comte, was
adopted by many Latin American intellectuals in the late nineteenth
and early twentieth centuries. Chilean positivists promoted secular
education, free inquiry, the scientific method, and social reform.
- real exchange rate
- The value of foreign exchange corrected for differences between
external and domestic inflation.
- reformed sector
- Under an unprecedented strong agrarian reform law proposed by
administration of Eduardo Frei Montalva (1964-70) in late 1965 and
adopted in July 1967, reformed sector was to be made up initially
of cooperatives for a transitional period of three to five years.
Then cooperative members would decide whether to divide the land
into individual plots.
- Richter scale
- A logarithmic scale, invented in 1935 by United States
geophysicist Charles Richter, for representing the energy released
by earthquakes. A figure of 2 or less in barely perceptible,
whereas an earthquake measuring over 5 may be destructive, and 8 or
more is a major earthquake.
- Rio Group
- A permanent mechanism for consultation and political
coordination that succeeded the Contadora Support Group in December
1986. It consisted of Argentina, Brazil, Colombia, Mexico, Panama,
Peru, Uruguay, and Venezuela. Its second meeting, attended by the
presidents of seven member-countries (Panama's membership was
temporarily suspended in February 1988), was held in Punta del
Este, Uruguay, in October 1988. Like the Contadora Support Group,
the Group of Eight advocated democracy and a negotiated solution to
the Central American insurgencies. Its name was changed in 1990 to
the Group of Rio, which had eleven members in 1993. In addition to
Chile, other members include Bolivia, Ecuador, and Paraguay. Its
seventh summit was held in Santiago on October 15-16, 1993.
- Rio Treaty (Inter-American Treaty of
- A regional alliance, signed in Rio de Janeiro in 1947, that
established a mutual security system to safeguard the Western
Hemisphere from aggression from within or outside the zone.
Signatories include the United States and twenty Latin American
republics. In 1975 a special conference approved, over United
States objections, a Protocol of Amendment to the Rio Treaty that,
once ratified, would establish the principle of "ideological
pluralism" and would simplify the rescinding of sanctions imposed
on an aggressor party.
- Southern Cone Common Market
- See Mercosur.
- state of exception
- States of assembly, siege, emergency, and catastrophe that may
be declared under Article 40 of the constitution by the president
of the republic, with the consent of the National Security Council,
cover the following exceptional situations, respectively: a foreign
war, an internal war or internal commotion, an internal
disturbance, and an emergency or public calamity.
- Advocates of structuralism, an economic policy that blames
chronic inflation primarily on foreign trade dependency,
insufficient local production, especially in agriculture, and
political struggles among entrenched vested interests over
government contracts. Structuralists advocate encouraging economic
development and modernization through Keynesian and neo-Keynesian
policies of governmental stimulative actions, accompanied by
organizational reforms. Structuralists contend that monetarist
(q.v.) policies retard growth and support the status quo.
- terms of trade
- The ratio between prices of exports and prices of imports. In
international economics, the concept of "terms of trade" plays an
important role in evaluating exchange relationships between
nations. The terms of trade shift whenever a country's exports will
buy more or fewer imports. An improvement in the terms of trade
occurs when export prices rise relative to import prices. The terms
of trade turn unfavorable in the event of a slump in export prices
relative to import prices.
- Third International
- Created in 1921 by the Russian Bolsheviks, its founding
involved the emergence of separate Communist parties sharply
opposed to Socialist or social democratic parties. These new
Communist parties were organized along Marxist-Leninist lines.
- value-added tax (VAT)
- An incremental tax applied to the value added at each stage of
the processing of a raw material or the production and distribution
of a commodity. It is calculated as the difference between the
product value at a given state and the cost of all materials and
services purchased as inputs. The value-added tax is a form of
indirect taxation, and its impact on the ultimate consumer is the
same as that of a sales tax.
- World Bank
- The informal name for the International Bank for Reconstruction
and Development (IBRD). IBRD was conceived at the Bretton Woods
Conference on July 22, 1944, and began operations in June 1946. Its
primary purpose is to provide technical assistance and loans at
market-related rates of interest to developing countries at more
advanced stages of development. The principal agencies affiliated
to the World Bank include the International Development Association
(IDA), International Finance Corporation (IFC), and Multilateral
Investment Guarantee Agency (MIGA). IDA, a legally separate loan
fund administered by the staff of IBRD, was established on
September 24, 1960, to furnish credits to the poorest developing
countries on much easier terms than those of conventional IBRD
loans. IFC, founded in July 1956, supplements the activities of
IBRD through loans and assistance designed specifically to
encourage the growth of productive private enterprises in less
developed countries. MIGA, founded in 1988, insures private foreign
investment in developing countries against various noncommercial
risks. The president and certain senior officers of IBRD hold the
same positions in the IFC. The IBRD and its affiliated
international organizations are owned by the governments of the
countries that subscribe their capital. To participate in the World
Bank Group, member states must first belong to IMF (q.v.).
In 1993 the World Bank included 160 member-countries. By the early
1990s, the Latin American and Caribbean region had received more
loan aid through the World Bank Group than any other region.