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, except Cuba.
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).
audiencia: 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- improvement projects.
Comintern: 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.
communitarianism: 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.
corporatism: 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 region.
Economic Commission for Latin America (ECLA): q.v. Economic Commission for Latin America and the Caribbean (ECLAC).
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.
encomenderos: 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.
encomienda(s): 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.
escudo: See Chilean peso.
Evangelicals: 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 were "Evangelicals."
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 (IMF): 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.
latifundios: 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 (LAFTA): 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 United Nations.
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.).
marginality: 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 thesis.
mayorazgo: 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.
mestizo: 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.
monetarists: 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 (NAFTA): 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, 1995.
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 (OAS): 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.
Peronism: 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.
plebiscite: 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.
positivism: 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 Reciprocal Assistance): 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.
structuralists: 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.