Key Economic Terms and Concepts

These flashcards cover key economic terms and concepts, providing definitions for each term to aid in studying and understanding the material.

Absolute Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower cost per unit than competitors.

Agglomeration Economies

The benefits that come when firms and people locate near one another in cities and industrial clusters.

Assembly Line

A manufacturing process in which parts are added in sequence to create a finished product faster and with less labor cost.

Base Industry

Industries that sell their products or services primarily to consumers outside the community, bringing income into the local economy.

Break-of-Bulk Point

A location where transfer among transportation modes is possible, such as ports and airports.

Capitalist Class

The social class composed of people who own the means of production and employ wage labor.

Carbon Neutrality

Achieving net zero carbon emissions by balancing emissions with carbon removal or offsets.

Carbon Offsets

A reduction in emissions of carbon dioxide or other greenhouse gases made to compensate for emissions made elsewhere.

Climate Change

Long-term alteration of temperature and typical weather patterns in a place, often driven by human activity.

Cogeneration

The simultaneous production of electricity and useful heat from the same energy source.

Commercial Farmers

Farmers who grow crops and raise livestock primarily for sale, not for personal consumption.

Commodity Dependence

When a country relies heavily on one or a few commodities for export revenue.

Comparative Advantage

The ability to produce a good at a lower opportunity cost than another producer.

Competitive Advantage

A condition that allows a company or country to produce goods or services better or more cheaply than its rivals.

Complementarity

When two regions each have something the other needs, facilitating trade.

Containerization

The use of standard-sized containers to transport goods efficiently over long distances.

Corporate Disinvestment

When corporations withdraw investment from a region or sector, often leading to deindustrialization.

Crude Oil

Unrefined petroleum extracted from the ground.

Customs Union

A trade agreement where member countries remove trade barriers between themselves and adopt a common external tariff.

Debt Crisis

A situation in which a country cannot pay back its government debt.

Deindustrialization

The decline of industrial activity in a region or economy.

Dependency Theory

A theory that resources flow from periphery (poor) countries to core (wealthy) countries, enriching the latter at the expense of the former.

Economic Sectors

Divisions of the economy: primary (raw materials), secondary (manufacturing), tertiary (services), quaternary (knowledge), quinary (leadership).

Ecotourism

Tourism directed toward natural environments intended to support conservation and observe wildlife.

Environmental Pollution

The contamination of the natural environment with harmful substances.

Export Processing Zone (EPZ)

An area within a country where imported materials undergo manufacturing and processing for export.

Financial Market

A marketplace where people trade financial securities, commodities, and other assets.

Fordism

A system of mass production with assembly lines, standardized products, and high wages for workers.

Formal Sector

The part of an economy that is taxed, monitored by any form of government, and included in GDP.

Fossil Fuels

Natural fuels such as coal, oil, and natural gas, formed from the remains of living organisms.

Free Trade Agreement

An agreement between countries to reduce or eliminate trade barriers.

Free Trade Zone (FTZ)

A region where goods can be landed, handled, manufactured, or reconfigured, and re-exported without customs intervention.

GDP per Capita

Gross Domestic Product divided by the population; a measure of average income.

Gender Empowerment Measure (GEM)

An index measuring gender equality in terms of political and economic participation.

Gender Inequality Index (GII)

An index measuring reproductive health, empowerment, and economic activity by gender.

Gender Parity

Equal contribution of women and men to every dimension of life, whether private or public.

Gross Domestic Product (GDP)

The total value of goods and services produced within a country’s borders in a given year.

Gross National Income (GNI)

Total domestic and foreign output claimed by residents of a country.

Gross National Product (GNP)

GDP plus income earned by residents from abroad, minus income earned by foreigners domestically.

Growth Pole

An urban center with attributes that, if augmented by investment, will stimulate regional economic development.

High-Technology Industry

Industries involving advanced technology, like electronics, biotechnology, and aerospace.

Human Development Index (HDI)

A composite index measuring average achievement in key dimensions of human development: health, education, and standard of living.

Import Substitution Industrialization (ISI)

An economic policy that advocates replacing foreign imports with domestic production.

Income Distribution

How income is divided among different groups or individuals.

Industrial Revolution

The transformation from an agricultural to an industrial nation, beginning in the 18th century.

Informal Sector

Economic activities that are not regulated by the government or included in GDP statistics.

International Division of Labor

The spatial shift of manufacturing industries from advanced capitalist countries to developing countries.

International Monetary Fund (IMF)

An international organization that provides loans to countries experiencing balance-of-payments problems.

Just-in-Time Manufacturing (JIT)

Production strategy that strives to improve efficiency by receiving goods only as they are needed.

Labor Productivity

The amount of goods and services that a worker produces in a given amount of time.

Labor Unions

Organizations formed by workers to protect their rights and interests.

Least-Cost Theory

A model developed by Alfred Weber to explain the optimal location of industries based on cost minimization.

Mass Consumption

A stage of economic development where most people consume more than just basic necessities.

Mass Production

The manufacture of large quantities of standardized products.

Mercantilism

An economic theory emphasizing the accumulation of wealth, especially gold and silver, through a positive balance of trade.

Mercosur

A South American trade bloc established to promote free trade and the fluid movement of goods.

Microloan

A very small, short-term loan with low interest, often for entrepreneurs in developing countries.

Middle Class

A socioeconomic group between the working class and the wealthy, typically with moderate incomes.

Multiplier Effects

Economic effects where an initial investment leads to greater increases in overall income.

Neoliberalism

A policy model that emphasizes free-market capitalism, deregulation, and reduction in government spending.

New International Division of Labor

The transfer of some types of jobs, especially those requiring low-paid, less-skilled labor, from more developed to less developed countries.

Nonpoint Source Pollution

Pollution that does not have a specific point of origin (e.g., runoff from fields).

Offshoring

Moving business operations to a different country to reduce costs.

Organization of Petroleum Exporting Countries (OPEC)

An intergovernmental organization that coordinates petroleum policies of member countries.

Outsourcing

Obtaining goods or services from an outside or foreign supplier.

Point Source Pollution

Pollution that comes from a single, identifiable source.

Post-Fordism

A flexible production model with small batch production, customization, and decentralized decision-making.

Primary Sector

The part of the economy concerned with natural resources extraction (e.g., farming, fishing).

Protectionism

Economic policy of restricting imports to protect domestic industries.

Purchasing Power Parity (PPP)

An economic theory that compares different countries' currencies through a 'basket of goods' approach.

Quaternary Sector

The knowledge-based sector, including services such as information technology and research.

Quinary Sector

The highest level of decision-making in a society or economy.

Resource Depletion

The consumption of a resource faster than it can be replenished.

Secondary Sector

The part of the economy that transforms raw materials into finished goods.

Semi-Periphery

Countries that share characteristics of both core and periphery countries.

Shipping Containers

Standardized metal boxes used for intermodal freight transport.

Special Economic Zone (SEZ)

An area where business and trade laws differ from the rest of the country to attract foreign investment.

Sustainable Development

Development that meets the needs of the present without compromising future generations.

Tariff

A tax on imports or exports between countries.

Tertiary Sector

The sector of the economy that provides services (e.g., retail, entertainment).

Textile

A type of cloth or woven fabric, often a significant export for developing countries.

Trade Embargo

A government order that restricts commerce with a specified country.

Transnational Corporation (TNC)

A large business organization operating in multiple countries.

Wage Labor

Work done in exchange for a regular wage.

Working Class

People employed in lower-paid, manual labor jobs.

World Bank

An international financial institution that provides loans and grants to developing countries.

World Systems Theory

A framework that sees the world economy as divided between core, semi-periphery, and periphery countries.

World Trade Organization (WTO)

An international body that enforces agreements that reduce barriers to international trade.