exam 1 econ 333

Dualistic-Development Thesis

Attributes underdevelopment to faulty advice from international experts.

Education Index (Haiti)

0.333.

Life Expectancy Index (Haiti)

0.256.

Standard of Living Index (Haiti)

0.256.

Human Development Index (HDI) for Haiti

0.257.

Closed economy

Assumes no international trade; no exports and imports.

Lewis Two-Sector Model

Growth in industrialized sectors due to rate of industrial investment and surplus labor.

Autarky

A closed economy that attempts to be completely self-reliant.

Economic Growth Factors

Stable government that protects property rights tends to lead to higher growth rates.

Increasing Saving Rate

In the long run, both productivity and real GDP per person are higher.

Structural Transformation

The shift from agrarian to manufacturing economy.

Poor Characteristics

More likely to live in a rural area.

Saving Rate Increase (Slovenia)

Lead to higher GDP growth for a period of several decades.

Social Fractionalization

Association between poor economic performance and ethnic/social divisions.

Capabilities Approach

Focuses on freedom regarding personal attributes and command over commodities.

Convergence Hypothesis

Explains why income of high-income and lower-income countries gets closer.

Neocolonial Dependence Model

Attributes underdevelopment to an exploitative global capitalist system.

Gross National Income (GNI)

Income received by residents of a country plus income earned abroad.

Main Contributor to Growth (Developing Countries)

Capital accumulation.

Millennium Development Goals

International commitments to reduce poverty, hunger, and improve health.

Human Capital

Improvements in a worker's skills through education and training.

Harrod-Domar Growth Model

Growth is mainly determined by capital accumulation.

Market Failure Example

Polio shots provide benefits to individuals and the community.

Gross Domestic Product (GDP)

Total dollar value of all final goods and services produced in the economy during a year.

Absolute Purchasing Power Parity

If no restrictions exist, identical products' prices should match in different markets.

Coordination Failure

Situation where agents cannot coordinate leads to worse outcomes.

Headcount Ratio

Percentage of the population below the absolute poverty line.

Asymmetric Information

One party has more information than the other in a transaction.

Kuznets Inverted-U Hypothesis

Inequality worsens then improves as a country grows.

Big-Push Theory

Coordination failures due to positive and negative externalities.

Lorenz Curve

Graph showing the distribution of income or wealth.

Gini Coefficient

Measure of income inequality within a population.

Poverty Trap

Cycle where low income leads to low investment and productivity.

O-ring Theory

Emphasizes the importance of skill complementarities.

S-Curve

Illustrates the typical growth path of a developing economy.

Total Poverty Gap

Total income needed to bring everyone below the poverty line up to the line.

Complementarities

Actions taken by one firm increase incentives for other firms.

Severity of Poverty Index

Weights extreme poverty more than just below the poverty line.

Mean Income Calculation

Average income calculated from ranked data.

Covariance (Income Distribution)

Used to calculate the Gini coefficient.

Inequality Importance

Can affect efficiency and structure of the economy.

Income Frequency Distribution

Percentile breakdown comparing income levels across a population.

Gini Coefficient by Country

Measures income distribution equality; lower is more equal.

Difference Between Poverty and Inequality

Poverty is about individual well-being; inequality compares standards of living.