Glossary -- Uruguay

ALADI (Asociación Latinoamericana de Integración)

Latin American Integration Association. Headquartered in Montevideo, ALADI was established in August 1980 to replace the twenty-year-old Latin American Free Trade Association (LAFTA). ALADI's members included Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay, and Venezuela. Instead of uniform tariff cuts, ALADI advocated a regional tariff preference for goods originating in member states and tariffs scaled according to a member country's level of economic development: most developed, intermediate, or least developed.

autonomous entities (entes autónomos)

Autonomous government agencies or state enterprises performing various industrial, commercial, or social services. The constitution stipulated that these bodies were to have a degree of autonomy or decentralization as established by laws enacted with the approval of an absolute majority of the full membership of each chamber of the General Assembly. They were administered by five- to seven-member boards of directors or directors general. Members were either elected by the Senate or appointed by the president with the consent of the Senate. The degree of autonomy or decentralization varied. For example, the constitution stipulated that postal, customs, port authority, and public health services were not to be fully decentralized, but rather granted only as much autonomy as was compatible with control by the executive.

The autonomous agencies could be divided into two general classifications: the first was concerned with education, welfare, and culture; the second, with industry and commerce. In the first classification, autonomous agencies supervised the University of the Republic and the councils for secondary and elementary education, as well as the training for teachers. Others were concerned with radio, television, the theater, housing, welfare, and social security. In the second classification, agencies supervised the waterworks, fishing industry, ports, national merchant marine, and production of petroleum products, cement, alcoholic beverages, and electric power. In the commercial field, autonomous agencies supervised the Central Bank of Uruguay, the Social Welfare Bank, the State Insurance Bank, and the Mortgage Bank.

A three-fifths vote of the full membership of both chambers of the General Assembly was required for the passage of a law to allow the admission of private capital in the organization or expansion of the assets of any of the autonomous entities, and the contribution of private capital, if allowed, was never to be greater than that of the national government. The state could also participate in the industrial, agricultural, or commercial activities of enterprises formed by workers' cooperatives, if it had the consent of the enterprise. The autonomous entities could not conduct any business not specifically assigned to them by law, nor could they expend any of their resources for purposes foreign to their usual activities.

consumer price index (CPI)

A statistical measure of sustained change in the price level weighted according to spending patterns.

Enterprise for the Americas Initiative

A plan announced by President George H.W. Bush on June 27, 1990, calling for the United States to negotiate agreements with selected Latin American countries to reduce their official debt to the United States and make funds available through this restructuring for environmental programs; to stimulate private investment; and to take steps to promote extensive trade liberalization with the goal of establishing free trade throughout the Western Hemisphere.

fiscal year

Same as calendar year.

GATT (General Agreement on Tariffs and Trade)

An intergovernmental agency related to the United Nations and headquartered in Geneva, GATT was established in 1948 as a multilateral treaty with the aim of liberalizing and stabilizing world trade. GATT's fundamental principles included nondiscriminatory trade among members, protection of domestic trade through the customs tariff, and agreement on tariff levels through negotiations among the contracting parties. The Uruguay Round of major multilateral trade negotiations, the eighth such round of negotiations, began at Punta del Este in September 1986.

GDP (gross domestic product)

A measure of the total value of goods and services produced by the domestic economy during a given period, usually one year. 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 term domestic is used to distinguish GDP from GNP (q.v.).

GNP (gross national product)

The total market value of all final goods and services produced by an economy during a year. Obtained by adding GDP (q.v.) and the income received from abroad by residents, less payments remitted abroad to nonresidents.

IMF (International Monetary Fund)

Established along with the World Bank (q.v.) in 1945, the IMF is a specialized agency affiliated with the United Nations that takes responsibility for stabilizing international exchange rates and payments. The main business of the IMF 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.

import-substitution industrialization

An economic development strategy that emphasizes the growth of domestic industries, often by import protection using tariff and nontariff measures. Proponents favor the export of industrial goods over primary products.

peso

The traditional unit of currency, first issued in 1862. Replaced by the Uruguayan new peso (q.v.) in 1975 at the rate of 1,000 old pesos for each new peso. The term peso is often used as a short form to refer to the Uruguayan new peso in the post-1975 era.

terms of trade

The number of units that must be given up for one unit of goods by each party, e.g., nation, to a transaction. The terms of trade are said to move in favor of the party that gives up fewer units of goods than it did previously for one unit of goods received and against the party that gives up more units of goods for one unit of goods received. In international economics, the concept of "terms of trade" plays an important role in evaluating exchange relationships between nations.

Uruguayan new peso

The Uruguayan unit of currency, consisting of 100 centésimos. Often referred to in short form as the peso. The Uruguayan new peso was introduced in 1975 to replace the old peso at the rate of 1,000 old pesos for each new peso. Since 1975 the exchange rate, linked to the United States dollar, has been frequently adjusted, with the value of the new peso declining. The average exchange rate per US$1 was N$Ur101 in 1985; N$Ur152 in 1986; N$Ur227 in 1987; N$Ur359 in 1988; N$Ur606 in 1989; and N$Ur1,171 in 1990. So extreme has the devaluation of the peso been that in 1991 Uruguayan authorities began to consider introducing another new peso, equal in value to 1,000 units of the existing new peso.

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 stage and the cost of all materials and services purchased as inputs. The VAT is a form of indirect taxation, and its impact on the ultimate consumer is the same as that of a sales tax.

World Bank

Informal name used to designate a group of three affiliated international institutions: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), and the International Finance Corporation (IFC). The IBRD, established in 1945, has the primary purpose of providing loans to developing countries for productive projects. The IDA, a legally separate loan fund administered by the staff of the IBRD, was set up in 1960 to furnish credits to the poorest of developing countries on much easier terms than those of conventional IBRD loans. The IFC, founded in 1956, supplements the activities of the IBRD through loans and assistance designed specifically to encourage the growth of productive private enterprises in less developed countries. To participate in the World Bank group, member states must first belong to the IMF (q.v.).