An increase in the actual level of output of goods and services produced by an economy, as well as the potential output overtime.
A multidimensional concept involving improvement in standards of living, reduction in poverty, improved health and education along with increased freedom and economic choice.
One of the factors of production, which itself has been produced (it does not occur naturally), including machinery, tools, equipment, buildings, etc.
The skills, abilities, knowledge and levels of good health acquired by people.
A poverty trap is caused by inability to invest in physical, human and natural capital due to low income, thus leading to low productivity and less growth in income, hence forming a perpetuating cycle.
Purchasing Power Parity exchange rates
Special exchange rates between currencies that makes the buying power of each currency equal to the buying power of US$1.
A summary measure of more than one indicator, often used to measure economic development. Eg. HDI
Human Development Index (HDI)
A composite indicator of development which includes indicators that measure three dimensions of development: income per capita (GNI per capita), levels of health (life expectancy at birth) and educational attainment (mean years of schooling and expected years of schooling).
Loans of small amounts that given to people who use the loans to start up small- scale businesses, often targeted towards people who don't have access to credits.
Dishonest or fraudulent conduct by those in power, typically involving bribery.
Occurs when assets or money rapidly flow out of a country, due to an event of economic consequence.
Refers to 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, it presupposes the imposition of protective measures.
Refers to a growth and trade strategy where a country attempts to achieve economic growth by expanding its exports. As a trade strategy, it looks outward towards foreign markets and is based on stronger links between the domestic and global economies.
The policy of liberalising (freeing up) international trade by eliminating trade protection and barriers to trade (i.e. tariffs, quotas, etc.)
Foreign direct investment
Refers to investment by firms based in one country in productive activities in another country.
A firm involved in foreign direct investment (FDI); it is a firm that is based in one country (the home country) and that undertakes productive investments in another country (the host country).
Aid that is given directly from one country to another.
Government foreign aid from several states that goes through a third party, such as the UN or another agency.
Official Development Assistance
The most important part of foreign aid, referring to foreign aid that is offered by countries or by international organisations composed of a number of countries.
Non-profit organisations that provide a very wide range of services and humanitarian functions; in developing countries they provide foreign aid, all of which takes the form of grants (there are no loans involved).
Foreign aid extended in regions where there are emergencies caused by violent conflicts or natural disasters such as floods, earthquakes and tsunamis, intended to save lives, ensure access to basic necessities such as food, water, shelter and health care, and provide assistance with reconstruction.
Foreign aid intended to help economically less developmed countries; may involve project aid, programme aid, technical assistance or debt relief.
A type of foreign aid consisting of funds that are in effect gifts (they do not have to be repaid).
Loans that are offered as part of foreign aid, made on concessional terms, i.e. that they are offered at interest rates that are lower than commercial rates, with longer repayment periods.
Foreign aid involving support for specific projects, such as building schools, clinics, hospitals, irrigation systems, other agricultural infrastructure, or others.
Foreign financial support to sectors, such as education, health care, agriculture, urban development, the financial sector, energy, the environment, or others.
The practice whereby 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 (IMF)
An international financial institution composed of 185 member countries, whose purpose is to make short-term loans to governments on commercial terms (i.e. non-concessional) in order to stabilise exchange rates, alleviate balance of payments difficulties and help countries meet their foreign debt obligations.
A development assistance organisation, composed of 185 member countries which are its joint owners, that extends long-term credit (loans) to developing country governments for the purpose of promoting economic development and structural change.
Refers to external debt, meaning the total amount of debt incurred by borrowing from foreign creditors .
Lengthening the time of debt repayment and forgiving, or dismissing, part of the loan.
The cancellation of all or part of a debt of a country by the lender country.
an economic development strategy based on the broad liberalisation of LEDC economies, emphasising neo-classical economics & minimal government intervention
New Development Consensus
an economic development strategy emphasising targeted government intervention along with trade liberalisation