42 terms


Comparative Advantage
Def: the ability of a country to produce a
particular good at a lower opportunity cost
than others (b/c they're focusing on
something else).
Sig. it allows LDCs (that otherwise wouldn't
have an advantage) to specialize in an
industry, which sparks development
Def: the relationship between two
countries when one has a surplus of a
product or service and the other a deficit.
Sig: It is a prerequisite of trade.
Dependency Theory
• The theory that developed countries and
powered elites exploit and subjugate other
populations and regions to secure for
themselves a continual source of resources
& wealth.
• Sig. Economic reliance by the periphery on
the core countries for technology, FDI &
demand for their exports.
Gender Inequality Index (GII)
- Maternal death rate & adolescent fertility
- Education attainment & parliamentary
participation v. men
- Labor force participation rate v. men
• Sig: Gender equality assists development
and reduces population pressures
Gini Coefficient
Def: an equation that is used to
measure the equality of the
distribution of something.
Ex: it can measure equality of income
or racial segregation (b/t 0 and 1—1
being the most unequal).
Gross Domestic Product (GDP)
The value of the total output of goods and
services produced in a country in a given
year (regardless of who produces it).
• Dividing the GDP by a nation's total
population gives us the per capita GDP
Human Development Index(HDI)
A measure of a country's standard of living
using its per capita GNI, years of education
(current & future) & life expectancy.
1. OECD Countries = .879
2. Latin America & the Caribbean = .704
3. Europe & Central Asia = .702
4. East Asia and the Pacific = .643
5. World = .624
6. Middle East = .588
7. South Asia = .516
8. Sub-Saharan Africa = .389
* Obviously you don't have to memorize the regions' HDI numbers
Import Substitution
Industrialization (ISI)
Def: A development strategy whereby an
LDC tries to promote its own industries
instead of importing manufactured goods
from the core.
• Sig: this form of protectionism was popular
during the 1970s with socialist regimes
• AKA: balanced growth approach or self
sufficiency approach
Millennium Development Goals
• Goals
- Eliminate extreme hunger & monetary poverty
- Universal elementary education
- Improve maternal health & gender equity
- Combat HIV?AIDs, malaria, etc.
- Ensure environmental sustainability
- Creation of a global partnership for change
• Sig: LDCs had to honor human rights &
root out corruption & MDCs needed to give
money & promote accountability
New International Division of
Def : Transfer of some types of jobs, especially
those requiring low-paid, less-skilled workers,
from more developed to less developed countries
-Sig : Transnational corporations allocate
production to low-wage countries through out
sourcing. (AKA global commodity chain)
Rostow's Development Model
A five stage model for economic development from a traditional
society to a consumer society
1 Traditional Society- high level of agriculture and capital devoted to
non-productive activities (LDCs)
2 Preconditions of Takeoff- investment in innovative technologies and
infrastructure increases, roads and irrigation (LDCs)
3 Takeoff- rapid growth comes from a few activities, textile or food
production, these industries become competitive (NICs)
4 Drive to Maturity- Efficiency spreads to other industries and workers
become more specialized (MDCs)
5 Age of Mass Consumption- shift to heavy industry and consumer
products (MDCs)
World Systems Theory
Def: the world is divided into core (powerful),
periphery (weak) & semi-periphery (both)
spheres. The spheres are connected through
an international division of labor.
Sig: Core (MDCs, W.E., N.A. & Japan),
Periphery (LDCs) and semi-periphery
(NICs, China)
Asians Tigers
S. Korea, Taiwan, Hong Kong and
• Sig: Concentrated on producing a handful
of manufactured goods (e.g clothing,
electronics) Cheap labor enabled them to
sell products inexpensively to MDCs.
Def: governments reduce spending on
education, health, etc. in order to reduce debt.
Sig: often the IMF requires austerity measures
in order to get loans.
The idea that a country should be selfsufficient
and not take part in international
• Ex. India and China, historically
constructed barriers to improve their
domestic economy
Calorie Consumption
A percentage of daily requirement is an
important index of development.
• Sig: People in MDCs generally consume
more than 130% of their daily requirements,
but most people in LDCs barely get enough
to sustain themselves.
Cultural Convergence
The sharing of technology, organizational
structures & cultural traits among cultures
• Sig. Toyota visiting the US and modeling
its production after Piggly Wiggly stores
Debt trap
Syndrome of always having to borrow in
order to develop or even just to "service"
the interest on previous loans.
• Ex. Many LDCs pay b/t 20-40% of
government revenue in interest payments.
The extent to which resources of a place
have been brought to full use (e.g.
production or education)
• Sig: often measured with HDI or per capita
Economic Sectors
Primary: Extraction of natural resources
(agro, mining & fishing)
• Secondary: Manipulating natural resources
(manufacturing & assembling of goods)
• Tertiary: Sale and exchange of goods and
services (haircuts and accounting)
• Quaternary: Involves the handling and
processing of information (information
technology & education)
Energy consumption
The use of energy as a source of heat or
power for manufacturing and transportation
• Ex. High consumption of fossel fuels by
MDCs for housing, etc. LDCs often use bio
fuels (found wood, dung & agricultural
Fair Trade
Emphasizes small and worker owned and
cooperatives. Requires employers to pay
workers fair wages, permit union organizing
and comply with minimum environmental
and safety standards.
• Fair trade coffee/chocolate may be more
expensive, but the producers earn more
because the middleman is cut out; better
quality product
Foreign Direct Investment (FDI)
Investment made by a foreign company into
the economy of another country.
• Ex. Wal-Mart buying and investing in
products (food, shoes, electronics, etc.) in
Gender Empowerment Measure
Compares the ability of women to
participate in economic and political
decision making.
• Ex: Countries with high GEMS are MDCs
like North America, Northern Europe, and
South Pacific. Low scores are in Africa and
• Replaced with the GII
Gender Related Development
Index (GDI)
Compares the level of development (HDI)
of women with that men.
• MDC's female life expectancy is 6 years
longer than men's. In LDCs the difference
is only a year or two.
• Replaced with the GII
Gross National Product (GNP)
The dollar value of all final goods and
services produced during a year by a
nation's people (regardless of where it is
• Product made in Mexico by US firms would
go towards the U.S. GNP.
Less Developed Countries
Def : Countries that are in the early stages
of development
• The population of an LDC is mostly in the
primary sector (often subsistance)
More Developed Countries
-Def : a country that has progressed relatively far
along a continuum of development (high per
capita GDP & HDI)
-Sig : Northern countries (U.S. Canada, Europe
Soviet Union and Japan) also, Australia and New
Zealand. All other countries & regions are
classified as LDCs
- Def :Initial dependence on the colonizer set into
motion a type of economic development that
continues to render them economically dependent
-Sig : Countries that rely on single-commodity
primary material exports in the LDC (like coffee).
Now production and trade are controlled by TNCs
rather than colonial governments.
Newly Industrialized Countries
-Def : countries formerly peripheral within the
world system that have acquired a significant
industrial sector, usually through foreign direct
investment from the core
-Ex : Asian Tigers, China, Mexico, Brazil, India,
Argentina, Thailand
Physical Quality of Life Index
measures the quality of life. The value is the
average of three statistics:
- basic literacy rate
- infant mortality
- life expectancy at age one
The amount of production from one hour of
labor. It's often increased by technology.
• Sig: the more productive a country, the
more it can produce
Purchasing Power Parity
It looks at what money in a particular
country can actually buy. It then creates an
"international dollar" to better compare
different countries real income
• It allows us to compare the level of
development of different countries
Structural Adjustment Program
Programs promoted by the IMF & World
Bank to help LDCs get out of debt (by
reducing corruption and spending) and
develop (by diversifying their
manufacturing base).
• Sig: some argue that poverty worsens under
them by shrinking the safety net
Sustainable Development Goals
Def: It works toward achieving the Millennium
Development Goals but in a way that will
maintain water, food & the environment for
future generations.
Def: taxes on imported goods
Sig: tariffs, if high enough, can be used to
block out imports to support domestic
production (protectionism).
Technology Gap
occurs when there is a wide gap between those who have access to
technology and use it effectively and those who do not. The
technology gap exists between those who can create and innovate
to produce new technologies and those who cannot.
Ex. In Japan there are 861 patents granted per million
people. In many developing countries the number is 0.
Technology transfer
is the process of sharing of skills, knowledge, technologies,
methods of manufacturing, samples of manufacturing and facilities
among governments and other institutions to ensure that scientific
and technological developments are accessible to a wider range of
users who can then further develop and exploit the technology into
new products, processes, applications, materials or services.
Third World
The economically underdeveloped countries of Asia, Africa,
Oceania, and Latin America, considered as an entity with common
characteristics, such as poverty, high birthrates, and economic
dependence on the advanced countries.
Sig: During the Cold War it referred to the poorer countries not
affiliated with the US or the USSR
Transnational Corporation
A company that conducts research, operates factories, and sells
products in many countries, not just where its head-quarters or
shareholders are located
Sig: Leads to globalization
Value added
The gross value of the product minus the costs of raw materials and
Ex. The value added per manufacturing worker is around
$80,000 in the U.S.
World Trade Organization
is an international organization designed by its founders to
supervise and liberalize international trade. It promotes freer trade
by negotiating agreements among member states that push the
world in the direction of free trade.
i.e.- it convinces member nations to lower protective tariffs and
other barriers