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.

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
Gini Coefficient
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A numerical measure of the level of income inequality in a nation. Measures the ratio of the area between the line of equality (the 45 degree line) and a nation’s Lorenz Curve to the total area below the line of equality. The closer the coefficient is to one, the more unequal a nation’s income distribution. The closer to zero, the more equal the nation’s income is distributed.

Gini Coefficient
Capital Flight
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When the scarce capital available to a less developed country leaves for the safety and security of a more developed economy. Financial capital flight occurs when savers prefer to put their money in foreign banks to domestic banks, reducing the supply of loanable funds in a poor county. Human capital flight is also known as “brain drain” when the skilled workers in a poor country prefer to seek work in a richer country, reducing the production possibilities of the less developed country.

Capital Flight
Debt cancellation
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See indebtedness. When international lenders from a more economically developed country (MEDC) who are owed money by a the government of a less economically developed country (LEDC),usually from loans taken out by corrupt governments in the past, forgive the debt they are owed. Allows for the limited tax revenues collected by the developing country’s government to be used to provide public goods and services (such as infrastructure, education and health care) which contribute to the poor country’s economic development.

Debt cancellation
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
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
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
Productivity
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The output per unit of input of a resource. An important determinant of the level of aggregate supply in a nation. Will increase as a result of better or more capital, education and health, all which add to the human capital of a nation.

Productivity
Foreign Direct Investment (FDI)
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Investment in factors of production abroad by multi-national corporations.

Foreign Direct Investment (FDI)
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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