Presentation The technical study described in this report was undertaken by the Economic Commission for Latin America and the Caribbean (ECLAC);, in response to a request by the Governments of Argentina and Chile for it to propose a common standardized methodology for the measurement of defence spending. The study, which was carried out between the fourth quarter of 1999 and August 2001 was funded by the two Governments concerned. The first chapter of this report describes the background to the initiative and the processes carried out by the parties involved. It also briefly acknowledges the timeliness and importance of two publications to this project: the National Defence Manual of Chile (1997);, and the National Defence White Paper (1999); published by the Ministry of Defence of Argentina. The report then discusses the main international sources of public information on defence spending, analysing the methodological bases used in each case to measure such expenditure; and it comments on the potentials and difficulties involved in comparing defence expenditures between different countries. The third chapter, which constitutes the core of this ECLAC secretariat study, presents a concrete proposal for a common standardized methodology for the measurement of defence spending, taking into account the particular characteristics of organizational structures in the Governments of Argentina and Chile, and especially their armed forces. This proposal envisages the measurement of defence spending in a sequence of ascending coverage levels, based on qualitative and quantitative information obtained from the two countries for the period 1996-1998. As mentioned in the final chapter, preparing and testing this methodology has generated a valuable learning process which we hope to have transmitted in this report. Hopefully the project will be useful in future initiatives, not only by the two Governments that pioneered it, but also by other countries in the region that have shown serious interest in applying its methodology. José Antonio Ocampo, Executive Secretary of ECLAC