Glossary -- Dominican Republic (Dominican Republic and Haiti)

colono(s): As used in the Dominican Republic, refers to a small independent sugarcane grower. In other Latin American countries, the word usually designates a settler or a tenant farmer.
Dominican Republic peso (RD$): Dominican monetary unit, divided into 100 centavos. The Dominican government officially maintained a one-to-one exchange rate between the peso and the United States dollar until 1985, when the peso was allowed to float freely against the dollar for most transactions. In 1988, the exchange rate reached US$1=RD$8.00; it subsequently leveled off to US$1=RD$6.35 by 1989. The government decided in 1988 to reinstitute a fixed exchange rate that it would adjust periodically in accord with prevailing economic conditions.
807 program: Refers to items 806.3, 807, and 807-A of the Tariff Schedules of the United States that allow the duty-free entry of goods when the final product contains a certain portion of raw material or labor value-added in the United States and the Caribbean Basin. Item 807-A provides guaranteed access levels to specific Caribbean Basin countries.
encomienda: A fiduciary grant of tribute collection rights over Indians, conferred by the Spanish crown on individual colonists (encomenderos), who in turn undertook to maintain order and to propagate Christianity.
fiscal year (FY): The Dominican Republic's fiscal year is the calendar year, except in the case of the State Sugar Council (Consejo Estatal de Azúcar--CEA), which runs in the cycle of October to September 30. Haiti's fiscal year is the same as that of the United States government, running from October 1 to September 30. Fiscal year dates of reference for these two countries therefore correspond to the year in which the period ends. For example, FY 1988 began on October 1, 1987, and ended on September 30, 1988.
gourde (G): The Haitian monetary unit, divided into 100 centimes. The official exchange rate of US$1=G5, established in 1919, remained in place in 1989. On the black market, however, the gourde traded at US$1=G7 or higher.
gross domestic product (GDP): A measure of the total value of goods and services produced by a domestic national 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). Only domestic production is included, not income arising from investments and possessions owned abroad, hence the use of the word "domestic" to distinguish GDP from gross national product (q.v.). Real GDP is the value of GDP when inflation has been taken into account.
gross national product (GNP): The total market value of all final goods and services produced by an economy during a year. Obtained by adding the gross domestic product (q.v.) and the income received from abroad by residents and then subtracting payments remitted abroad to nonresidents. Real GNP is the value of GNP when inflation has been taken into account.
import substitution: Also known as 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 that of primary products.
Industrial Free Zone(s): Also known as free trade zones, or free zones, these industrial parks played host to manufacturing firms that benefited from favorable business conditions extended by a given government in an effort to attract foreign investment and to create jobs. In the Dominican Republic, free-zone enterprises paid no duties on goods directly imported into, or exported from, the free zone. These enterprises also enjoyed exemptions from Dominican taxes for up to twenty years, and they were allowed to pay workers less than the established minimum wage.
International Monetary Fund (IMF): Established along with the World Bank (q.v.) in 1945, the IMF is a specialized agency affiliated with the United Nations; it is responsible for stabilizing international exchange rates and payments. The main business of the IMF is the provision of loans to its members (including industrialized and developing countries), when they experience balance of payments difficulties. These loans frequently carry conditions that require substantial internal economic adjustments by the recipients, most of which are developing countries.
liberation theology: An activist movement led by Roman Catholic clergy who trace their inspiration to Vatican Council II (1965), where some church procedures were liberalized, and the Second Latin American Bishops' Conference in Medellín, Colombia (1968), which endorsed greater direct efforts to improve the lot of the poor.
Lomé Convention: A series of agreements between the European Economic Community (EEC) and a group of African, Caribbean, and Pacific (ACP) states, mainly former European colonies, that provided duty-free or preferential access to the EEC market for almost all ACP exports. The Stabilization of Export Earnings (Stabex) scheme, a mechanism set up by the Lomé Convention, provides for compensation for ACP export earnings lost through fluctuations in the world prices of agricultural commodities. The Lomé Convention also provides for limited EEC development aid and investment funds to be disbursed to ACP recipients through the European Development Fund and the European Investment Bank. The Lomé Convention is updated every five years. Lomé I took effect on April 1, 1976; Lomé II, on January 1, 1981; Lomé III, on March 1, 1985; and Lomé IV, on December 15, 1989. Lome IV included the Dominican Republic, Haiti, and Namibia in the convention for the first time.
936 funds: Funds deposited by United States-based corporations in the Government Development Bank of Puerto Rico in order to take advantage of Section 936 of the United States Internal Revenue Service Code, under which income derived from sources in Puerto Rico is exempted from United States income taxes. These funds may be used to help finance twin plant ventures with countries that have signed a bilateral tax information exchange agreement with the United States.
Paris Club: A Paris-based organization that represents commercial banks in the rescheduling of national debts.
San José Accord: An agreement between Mexico and Venezuela--signed in 1980 in San José, Costa Rica, whereby the two oil producers committed themselves to supply crude oil on concessionary terms to ten Central American and Caribbean nations.
terms of trade: Number of units that must be given up for one unit of goods received 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 plays an important role in evaluating exchange relationships between nations.
twin plant: Productive arrangements whereby two or more producers in separate countries complementarily share the production of a good or service. Under the Caribbean Basin Initiative (CBI--see Appendix B), such arrangements with the government of Puerto Rico potentially benefited from special investment or 936 funds (q.v.). The operations of Twin Plant ventures typically entailed the delegation of assembly or other labor-intensive production stages to plants in a CBI-designated country, from which these semi-finished products would then be shipped duty-free to Puerto Rico for final processing.
World Bank: Internal 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 as its primary purpose the provision of 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 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 the less developed countries. The president and certain senior officers of the IBRD hold the same positions in the IFC. The three institutions are owned by the governments of the countries that subscribe their capital.

NOTE: The information regarding Dominican Republic on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Dominican Republic Glossary information contained here. All suggestions for corrections of any errors about Dominican Republic Glossary should be addressed to the Library of Congress and the CIA.

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