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IB Economics - Development

Terms in this set (34)

composite indicator
A summary measure of more than one indicator, often used to measure economic development; for example the Human Development Index(HDI), that measures income, education and health indicators.
concessional loan
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. conditional assistance Refers to development assistance provided by bilateral or multilateral development organisations, which is extended to countries on condition that they satisfy certain requirements, usually requiring that they adopt particular policies.
development aid
Foreign aid intended to help economically less development countries; may involve project aid, programme aid, technical assistance or debt relief.
dual economy
Arises when there are two different and opposing sets of circumstances that exist simultaneously, often found in economically less developed countries, such as for example, wealthy, highly educated groups coexisting with poor, illiterate groups, a formal and informal urban sector, and a low-productivity agricultural sector and a high-productivity urban industrial sector.
economic development
Broad-based rises in the standard of living and well-being of a population, particularly in economically less developed countries. It involves increasing income levels and reducing poverty, reducing income inequalities and unemployment, and increasing provision of and access to basic goods and services such as food and shelter, sanitation, education and health care services.
economically less developed countries
According to the World Bank's classification system, includes countries that have a per capital GNI below a particular level(which changes from year to year); some common characteristics include low levels of GDP per capita, high levels of poverty, large agricultural sectors and large urban informal sectors.
economically more developed countries
According to the World Bank's classification system, includes countries that have a per capital GNI above a particular level; they generally have relatively high levels of GDP per capita, relatively low levels of poverty, small agricultural sectors, and large industrial and services sectors
empowerment
Creation of conditions for equality of opportunities; involves increasing the political, social, and economic power of individuals or groups of individuals.
foreign aid
Consists of concessional financial flows from the developed world to economically less developed countries, and includes concessional loans and grants. See also concessional loan and official development assistance. To be contrasted with multilateral development assistance.
foreign debt
Refers to external debt, meaning the total amount of debt (public and private) incurred by borrowing from foreign creditors (i.e. lenders). The global problem of debt involves large volumes of public (i.e. government) debt.
governance
Refers to 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 such as economic growth and development.
grant
A type of foreign aid consisting of funds that are in effect gifts (they do not have to be repaid).
Human Development Index (HDI)
A composite indicator of development which includes indicators that measure three dimensions of development: income per capita, levels of health and education attainment; is considered to be a better indicator of development than single indicators such as GNI per capita.
humanitarian aid
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.
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.
micro-credit
A programme to provide credit (loans) in small amounts to people who do not ordinarily have access to credit. 'Micro' is the Greek word for 'small', and refers to the small amounts of the loans, the very small size of businesses or activities that are financed by the loans (very small businesses are known as 'micro-enterprises') and the short repayment periods involved.
Millennium Development Goals(MDGs)
Eight development goals adopted by the Millennium Declaration of 2000, consisting of 18 targets to be achieved by the year 2015; among the eight goals, four include eradicating extreme poverty and hunger, achieving universal primary education, reducing child mortality, promoting gender equality.
Multilateral development
assistance lending to developing countries for the purpose of assisting their development on non-concessional terms (market rates of interest and repayment periods) by multilateral organisations, i.e. organisations composed of many countries, including development banks such as the WorldBank, and the International Monetary Fund; to be contrasted with foreign aid.
Multinational corporation (MNC)
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)
Nationalisation
a transfer in ownership of a firm away from the private sector and toward government ownership; a nationalised firm is a government-owned firm.
Natural capital
Refers to an expanded meaning of the factor of production land, including everything that is included in land plus additional natural resources occurring naturally in the environment such as the air, biodiversity, soil quality, the ozone layer and the global climate is considered to be a type of 'capital' because it provides a stream of future benefits as it is necessary for human kind's ability to live, survive and produce in the future.
Non-governmental organisations(NGOs)
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). They are involved with an enormous range of activities, including emergency assistance, promotion of sustainable development, poverty alleviation, protection of child health, provision of technical assistance, and many more.
Official Development Assistance(ODA)
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 (it does not include aid offered by non-governmental organisations).
programme aid
Foreign aid involving financial support to sectors, such as education, health care, agriculture, urban development, the financial sector (credit, banking, insurance), the environment, or others.
project aid
Foreign aid involving support for specific projects, such as building schools, clinics, hospitals, irrigation systems, other agricultural infrastructure, or others.
Tied aid
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. It occurs only in the context of bilateral (not multilateral) aid.
Trade liberalisation
The policy of liberalising (freeing up) international trade by eliminating trade protection and barriers to trade (i.e. tariffs, quotas, etc.)
purchasing power parity (PPP)
exchange rates 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. The use of PPP exchange rates to convert GDP (or GNI or any other output or income variable) eliminates the influence
appropriate technology
Technologies that are well-suited to a countrys particular economic, geographical, ecological and climate conditions. Often used in connection with labour-abundant developing countries that require labour intensive (as opposed to capita- intensive) technologies.
export promotion
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. To be contrasted with import substitution.
factor endowments
The factors of production that a country is 'endowed with', or possesses. Differing factor endowments among countries suggests that different countries are better suited to the production of certain kinds of goods and services than others, or, to put it differently, they are more efficient in the production of some things rather than others. Differing factor endowments form the basis of the theory of comparative advantage. (Also known as 'resource endowments'.) factors of production All resources, or inputs (land, labour, capital, entrepreneurship) used to produce goods and services.
foreign direct investment (FDI)
Refers to investment by firms based in one country (the home country) in productive activities in another country (the host country). Firms that undertake FDI are called multinational corporations.
import substitution
Also known as import-substituting industrialisation, refers to a growth and trade strategy where a country begins to manufacture simple consumer goods oriented towards the domestic market (such as shoes, textiles, beverages, electrical appliances) in order to promote its domestic industry; it presupposes the imposition of protective measures (tariffs, quotas, etc.) that will prevent the entry of imports that compete with domestic producers. To be contrasted with export promotion.
relative poverty
The inability of an individual or a family to afford an adequate standard of goods and services, where the adequate standard is relative and changes over time; this standard is defined as what is 'typical' in a society, taken to be a particular percentage (often 50%) of society's median income. As incomes increase and the median income rises, the standard also rises.
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