Econ

Absolute poverty

People living below the minimum income necessary to satisfy basic physical needs (food, clothing, and shelter); as of October 2015, the World Bank international poverty line is set at US$1.90 PPP per day.

Appropriate technology

Technology that relies mostly on the relatively abundant factor an economy is endowed with.

Bilateral trade agreement

An agreement between two countries to phase-out or eliminate trade-related barriers.

Circular flow of income

A simplified illustration that shows the flows of income and expenditures in an economy.

Customs union

An agreement between countries to phase out or eliminate tariffs and other trade barriers and establish a common external barrier toward non-members.

Development aid

Aid aimed at assisting developing countries in their development efforts, including project aid, program aid, and debt relief.

Economically least developed countries (ELDCs)

Low-income countries facing severe structural constraints to sustainable development.

Economic development

A multidimensional concept involving a sustained increase in living standards, higher levels of income, and better access to goods and services.

Economic growth

Refers to increases in real GDP over time.

Economic integration

Economic interdependence between countries usually involving agreements to phase-out or eliminate trade and other barriers.

Economics

The study of how to make the best possible use of scarce resources to satisfy unlimited human needs and wants.

Exports

Goods and services produced in one country and purchased by consumers in another country.

Export promotion

Growth policies aiming at expansion of export revenues as the vehicle of economic growth.

Factors of production

Resources used in the production of goods and services; includes land, labour, capital, and entrepreneurship.

Firms

Productive units that transform inputs into output, usually aiming at earning profits.

Foreign aid

Flows of grants or loans from developed to developing countries for non-commercial purposes.

Free trade

International trade that is not subject to any kind of trade barriers.

Free trade area/agreement

An agreement between two or more countries to phase-out or eliminate trade barriers amongst themselves.

Government spending (G)

All spending by the government that is distinguished into current expenditures, capital expenditures, and transfer payments.

Gross domestic product (GDP)

The value of all final goods and services produced within an economy over a period of time.

Growth in production possibilities

When the production possibilities of a country increase due to more or better resources and/or better technology.

Household indebtedness

The money that households owe.

Households

Groups of individuals in the economy who share the same living accommodation.

Human capital

The education, training, skills, experience, and good health embodied in the labour force of a country.

Human Development Index (HDI)

A composite index of development that reflects the three basic goals of development.

Humanitarian aid

Aid given to alleviate short-term suffering, usually as a result of a natural catastrophe or war.

Imports

The value of goods and services purchased domestically that are produced abroad.

Import substitution

A growth strategy where domestic production is substituted for imports.

Income

A flow of earnings from using factors of production to produce goods and services.

Informal economy

The part of an economy where activity is not officially recorded, regulated, or taxed.

Infrastructure

Physical capital essential for economic activity, including roads, power, and telecommunications.

International Monetary Fund (IMF)

An international financial institution that improves global monetary cooperation and secures financial stability.

International trade

Trade that involves the exports and imports of goods or services between countries.

Investment (I)

Spending by firms on capital goods such as machines, tools, and factories.

Labour

The physical and mental contribution of workers to the production process.

Land

Natural resources with which an economy is endowed.

Leakages

Income not spent on domestic goods and services, including savings, taxes, and import expenditure.

Long-term growth

Growth over long periods of time.

Multilateral development assistance

Assistance provided by multilateral organizations to developing countries.

Multilateral trade agreement

An agreement between many countries to lower tariffs or other protectionist measures.

Net exports (X – M)

Export revenues minus import expenditure.

Nominal gross domestic product

The total money value of all final goods and services produced in an economy at current values.

Non-governmental organization (NGO)

Organizations that promote economic development and humanitarian ideals.

Official Development Assistance (ODA)

Aid provided to a country by another government or multilateral agency.

Per capita

Per person; per capita values are found by dividing the variable by the size of the population.

Potential output

Output produced by an economy at full employment equilibrium.

Poverty

Arises when the lack of material possessions or money prevents an individual or family from achieving a minimum satisfactory standard of living.

Poverty line

A level of income determined by a government that is just enough to meet minimum needs.

Poverty trap/cycle

A circular chain of events starting and ending in poverty.

Preferential trade agreement

An agreement where a country gives preferential access to certain products to trading partners.

Primary commodities

Raw materials produced in the primary sector.

Primary sector

Anything derived from the factor of production land.

Production possibilities curve (PPC)

A curve showing the maximum combinations of goods or services that can be produced by an economy.

Productive capacity

The greatest capability of an economy to produce goods and services.

Real GDP

The total value of all final goods and services produced in an economy, adjusted for inflation.

Real GDP per person (per capita)

Real GDP divided by the population of the country.

Real GNI per person (per capita)

Real GNI divided by the population of the country.

Regional trade agreement

An agreement between a group of countries to lower or eliminate trade barriers.

Relative poverty

A measure of poverty according to which income levels do not allow people to reach a standard of living typical of society.

Sustainable debt

A level of government debt that allows for interest and repayment while meeting economic growth objectives.

Sustainable development

The degree to which the current generation meets its needs while conserving resources for future generations.

Sustainable Development Goals (SDGs)

The UN's 17 global goals that aim to end poverty, fight inequalities, and tackle climate change.

Tariff

A tax on imports to protect domestic industries and raise government revenue.

Trade liberalisation

The process of reducing barriers to international trade.

World Bank

An international organization that provides loans and advice to less developed countries.

World Trade Organization (WTO)

An international body that sets rules for global trading and resolves disputes between member countries.