Development Economics Flashcards

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 45 flashcards covering Development Economics.

Sustainability
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The ability to endure over time. Sustainable growth requires that resources are used at a rate at which they are able to replenish themselves and the environment is not despoiled in the process of production.

Sustainability
Infrastructure
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The physical assets of a nation which increase the efficiency with which the nation produces its output. Includes all the roads, electricity grids, water and sewage facilities, but also factories, airports, railways, tunnels, bridges schools and hospitals: anything that increases the productivity of labor in the nation.

Infrastructure
Long-run Economic growth
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An increase in national output resulting from an increase in aggregate supply. If GDP rises because the nation’s resources became more productive or more abundant, then the full employment level of output will increase, indicating that such growth in sustainable, and most likely characterized by low inflation (i.e. stable price levels).

Long-run Economic growth
Non-convertible currencies
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A barrier to economic development arising from a nation’s inability to convert its currency on foreign exchange markets, thus its inability to acquire the foreign capital it needs to achieve improvements in productivity, income and human welfare among its people.

Non-convertible currencies
Terms of Trade
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The ratio of an index of a nation’s export prices to its import prices. An improvement in the terms of trade means export prices have risen relative to import prices. A worsening means import prices have risen relative to export prices.

Terms of Trade
Commodity agreements
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An agreement between nations that produce a particular commodity (for example, coffee) meant to stabilize the global output of the good to maintain stable prices over time. Reduces fluctuations in prices of the commodities that many people in the developing world are involved in the production of.

Commodity agreements
Absolute Poverty

 

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Definition: The state of people who live on less than $1.25 per day (purchasing power parity), as defined by the World Bank. Generally, such individual are unable to afford the basic necessities of life: food, shelter, education, health, etc.

Example: Because of the high HIV infection rate, the low per capita income, the short life expectancy and the low literacy rates, there are many people living in absolute poverty in sub-Saharan Aftica

Absolute Poverty
World Bank
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An international agency which makes soft loans to less economically developed countries, mostly for infrastructure projects or other investments which improve the physical or the human capital of the developing country.

World Bank
Diversification
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Producing a variety of different goods as a strategy to protect a nation from the unforeseen demand shocks which often disrupt the economic growth and development of certain developing nations which are over-dependent on the production of single commodity (e.g. oil, coffee, diamonds, bananas).

Diversification
Dumping
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The practice of producers in one nation selling their output at a price lower than their costs of production in another nation. Considered a justification for protectionism by the World Trade Organization.

Dumping

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