IB HL Development Economics definitions
Terms in this set (33)
Increases in total real output produced by an economy over time.
Rises in the standard of living and well-being of a population, particularly in economically less developed countries. Involves increasing income levels, reducing poverty and income inequality and increasing provision and access to basic goods and services.
Poverty trap (cycle)
Arises when low incomes result in low savings, permitting low investments in physical, human and natural capital, and therefore low productivity of labour and land, which in turn gives rise to low, if any, growth in income and hence the cycle continues.
Gross domestic product
A measure of the value of aggregate output of an economy over a period of time.
Gross national income
A measure of the total income received by residents of a country over a period of time.
Purchasing power parity
Special exchange rates between currencies that makes the buying power of each currency equal to the buying power of US$1, and therefore equal to each other.
Human Development Index
A composite indicator of development which includes 3 measures of development: income per capita, levels or health and educational attainment.
A programme to provide credit in small amounts to people who do not necessarily have access to credit.
A growth and trade strategy where a country begins to manufacture simple consumer goods oriented towards the domestic market in order to promote its domestic industry. Also uses trade protection.
A growth and trade strategy where a country attempts to achieve economic growth by expanding its exports.
Increasing the variety of goods and services produced and exported by a country.
Foreign direct investment
Investment by firms based in one country in productive activities in another country. Firms that undertake FDI are called MNCs.
Non-profit organisations that provide a very wide range of services and humanitarian functions, including giving foreign aid.
Official development assistance
Foreign aid that is offered by countries or by international organisations made up of a number of countries.
Foreign aid extended in regions where there are emergencies caused by violent conflicts or natural disasters. Intended to provide access to the bare necessities.
A type of foreign aid consisting of funds that are in effect gifts as they do not require repayment.
Foreign aid intended to help economically less developed countries; may involve project or programme aid.
Foreign aid involving support for specific projects e.g. hospitals, schools etc.
Foreign aid involving financial support to sectors, e.g. education, health care etc.
Consists of concessional financial flows from the developed world to economically less developed countries, and includes concessional loans and grants.
When donors make the recipients of foreign aid spend a portion of the borrowed funds on the purchase of goods and services from the donor country.
International Monetary Fund
An international financial institution whose purpose is to make short term loans to governments on commercial terms in order to help countries meet their foreign debt obligations, stabilise exchange rates and alleviate balance of payments difficulties.
The World Bank
A development assistance organisation, that extends long-term credit to developing country governments for the purpose of promoting economic development and stuctural change.
The total value of money borrowed from other countries.
Balance of payments
A record of all transactions between the residents of a country and the residents of all other countries, showing all credits and debits, which over the course of a year must equal each other.
Paying the interest on the loan. It appears in the current account.
Loans that are offered as part of foreign aid, with interest rates are lower than commercial rates and longer repayment periods.
Refers to development assistance provided by bilateral or multilateral development organisations, which is extended to countries on condition that they satisfy certain requirements e.g. adopting contractionary policies.
Arises when there are two different and opposing sets of circumstances that exist simultaneously, often found in economically less developed countries. E.g. wealthy, highly educated groups coexisting with poor, illiterate groups.
The way of governing and the exercise of power in the management of an economy's economic and social resources, in order to achieve particular objectives e.g. economic Growth & Development.
A firm involved in foreign direct investment.
The basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of an economy
a measure of the skills, education, capacity and attributes of labour which influence their productive capacity and earning potential.