Chapter 11 - International Relations

Developing country

Poor countries whose residents have not, on average, attained the living standards typically enjoyed by residents of wealthy countries.

Human development

A process of enlarging people's choices and giving them a means to lead lives that they value. Measurements of human development include such factors as life expectancy, income, and education.

Economic development

The attainment by a poorer country of an increase in its rate of growth of GDP per capita.

Good governance

A country with this typically possesses transparent and consistent political and legal systems, combats official corruption, and protects property. These factors encourage individuals to save, make investments, and pursue technological innovations that promote economic growth.

Dependency

A school of thought that argues that international economic linkages hinder development in developing countries.

Resource curse

The possibility that the possession by developing countries of natural resources, in particular petroleum, is more likely to hinder rather than to advance the development prospects of those countries.

Import-substituting industrialization (ISI)

A national development strategy that seeks to avoid international economic linkages in favor of focusing on domestic production.

National champion

In a state pursuing a strategy of ISI, the government nominates firms it believes could do the best job of producing the substituted industrial goods.

International commodity cartels

Groupings of developing-country governments that try to control the supply of a raw material or agricultural product on world markets in order to drive up prices and maximize revenues.

International commodity agreement

An agreement, generally sought by developing countries' exporters, on the supply and price of that commodity. The goal is not to maximize prices but rather to establish an acceptable, consistent price that the developing country can rely on.

Export-led growth (ELG)

A strategy that argues developing countries should rely on price-competitive exports to stimulate national economic development.

Asian Tigers

Originally Taiwan, South Korea, Singapore, and Hong Kong, who achieved rapid growth rates using a strategy of export-led growth. Now many rapidly growing Asian countries are considered 'tigers.'

Beijing Consensus

The idea that, for some poor countries, development can be best attained by government controls, trade integration, capital inflows and outflows, the movement of labor, and the external value of the currency.

International financial flows

The movement of capital from private or governmental individuals or organizations inside one country to private or governmental individuals or organizations inside another country. These flows consist of both private and official financial flows.

Private financial flows

International financial flows that originate with nongovernmental entities, such as individuals, private charities, or private firms such as banks or multinational enterprises.

Official financial flows

International financial flows that originate with governmental entities.

Official development assistance (ODA)

The provision by a donor government to a developing country of grants or loans with highly favorable repayment terms (for example, 50 years to repay, at 1 percent interest).

Tied aid

A practice in which donor governments require that the funds they give to a recipient country must be used to purchase goods and services provided by firms from the donor country.

Poverty trap

When a country is so poor that most of its national resources must be used to satisfy the immediate day-to-day needs of the population, with insufficient resources left for savings or investment.

Millennium Development Goals (MDGs)

A series of goals related to health, education, and poverty, agreed upon by world leaders at the UN in September 2000.

Sustainable Development Goals (SDGs)

World leaders in 2015 agreed to a new Agenda for Sustainable Development, with goals regarding poverty, gender equality, and environmental protection.

Structural adjustment program (SAP)

Agreement between the IMF and the recipient government on how it will change its microeconomic policies.

Stabilization program

A contract between the IMF and a loan-recipient country stipulating what macroeconomic policy changes the country will undertake to ensure that its short-term foreign exchange shortfall does not become permanent.

Moral hazard

When an individual or some other actor believes they can take very great risks because, if things go badly, someone else will pay for the consequences of the risky behavior.

BRICS

Five rapidly developing countries which have the collective potential, within several decades, to overtake the combined economic weight of the industrial world.

State-owned enterprises (SOEs)

Companies owned directly by the government of a state.

Purchasing power parity (PPP)

A measure economists use to compare the value of a similar basket of goods across countries with different living standards and exchange rates.

Iron rice bowl

A guarantee from the government of Communist China of job security and access to basic necessities for Chinese citizens.