Development economics

• Absolute poverty


  involves incomes that are at or below a minimum income level which may be defined as a poverty line) needed to secure the basic necessities of life (such as food, shelter, clothing).
• Bilateral aid


  is aid given directly from one country to another.
• Corruption


  is the abuse of public office for private gain, the abuse (dishonest use) of power (position). Examples might include activities such as bribery, misuse of contract payments, and embezzlement.
• Development aid


  is aid given to enhance the standard of living and includes grants, concessional long-term loans, project aid, programme aid, debt cancellation, technical assistance, humanitarian aid, multilateral aid, bilateral aid. (M13)
• Diversification


  is a strategy to increase the variety of goods and services produced in order to avoid (the risks associated with) overspecialisation.
• Economic development


  is a broader concept than economic growth involving welfare improvements to the standard of living including health, education and shelter.
• Economic growth


  is the increase in a country's output over time; that is an increase in national income.
• Export promotion


  is the encouragement of free trade in goods and the free movement of capital and labor. The theoretical justification is that export promotion increases output and growth arising from the use of comparative advantage.
• Foreign aid


  is a gift of money or technical assistance that does not have to be repaid. It may be offered to developing countries with a low per capita income in order to help them invest
• Foreign debt


  is debt owed to foreign country lenders. These are most significant in the case of a number of developing countries which are heavily indebted
• Foreign direct investment (FDI)


  is the establishment of production units by multinational companies in a foreign country.
• Human Development Index


  is a measure of the quality of life constructed by the United Nations Development Programme. It takes into account not just income but a range of criteria such as literacy, life expectancy, clean water, inequality and gender issues
• Import substitution


  is a deliberate effort to replace major consumer imports by promoting the emergence and expansion of domestic industries such as textiles, shoes and household appliances.
• Indebtedness


  is the amount of money that a country owes to other countries and/or international institutions.
• Informal sector


  is sometimes known as the grey economy and is the part of an economy that is neither taxed, nor monitored by any form of government. This will not be recorded in official figures, and is likely to be bigger in less developed economies.
• International Monetary Fund


  is an autonomous financial institution that originated in the Bretton Woods Conference of 1944.
• Micro-credit


  is a loan that allows poor people to set up a small scale business, is loaned to borrowers who do not have security/collateral, and contributes to the empowerment of women. (M13)
• Millennium Development Goals (MDGs)

  include eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality and empower women, reducing child mortality,improving maternal health, combating HIV/AIDS, malaria and other diseases, ensuring environmental sustainability, and developing a global partnership for development.
• Multilateral aid


  is money that is given by countries to international (or multilateral) institutions which are distributed to countries.
• Multinational corporations (MNCs)


  are companies that have productive units in more than one country. Reasons they might invest in LDCs include:gaining access to new markets, cutting costs by avoiding the need to comply with legislation which exists in the domestic economy, gaining access to resources, cheaper labour and raw materials, avoiding import duties by producing in the target market.
• NGOs


  are non-government organizations that exist to: promote sustainable economic development and/or humanitarian ideals.
• Official aid


  is aid provided to a country by another government or governmental organization such as UN or EU.
• Official development assistance (ODA)

  is a term coined by the Organisation for Economic Co-operation and Development (OECD) to measure aid. It is widely used as an indicator of international aid flow. It includes some loans.
• Over-specialisation


  is where an economy becomes too reliant on one sector of industry and this can lead to limitations on international trade and economic development, particularly if the industry in question goes into decline, or if the price of the product falls.
• Poverty cycle (poverty trap)

  involves low incomes which lead to low savings and low investment which ensure low incomes in the future. It means that poverty is self-perpetuating with low income as the cause
• Price volatility


  refers to the tendency of world prices of some products to change suddenly, dramatically and unexpectedly. It is common with commodities.
• Purchasing Power Parity


  is the purchasing power of a country's currency: the number of units of that currency required to purchase the same basket of goods and services in another country.
• Resource endowments


  refer to the factors of production that a country has available to it, and can include natural resources or labour, for example.
• Sustainable development


  is the development needed to meet the needs of the present generation without compromising the ability of future generations to meet their own needs.
• Tied aid


  is granted on the condition that it is used to buy goods or services from the donor country.
• Trade liberalisation


  is the process of limiting and reducing trade barriers and drawing closer towards a situation of free trade
• World Bank


  is an international organization whose main aims are to provide aid and advice to developing countries, as well as reducing poverty levels.
• World Trade Organization (WTO)

  is an international body that encourages the reduction of trade barriers between its member nations. Objectives include: promoting free trade among member countries by reducing trade barriers and administering trade agreements.