global3

What is GDP?

The total value of goods and services produced within a country during a particular period.

What is GDP per capita?

GDP divided by population, used to estimate average production or income per person.

What is gross national income or GNI?

The total annual income received by residents of a country.

Why might GDP or GNI underestimate economic activity?

Informal and unrecorded cash transactions may not appear in official statistics.

What is purchasing power parity or PPP?

An adjustment that accounts for differences in prices between countries.

Why is PPP useful?

It shows what people can actually purchase and improves comparisons of living standards.

What is the Human Development Index or HDI?

A development measure combining income, education, and life expectancy.

What is productivity?

The amount of output produced from a given amount of labor, capital, or resources.

What is innovation?

The introduction of new or improved products, technologies, or business processes.

What is entrepreneurship?

Creating and operating a business while accepting risk to pursue an opportunity.

How does innovation promote economic growth?

It raises the productivity of labor and capital, allowing more valuable output.

Why do market economies encourage entrepreneurship?

People can own businesses, keep profits, compete, and benefit from successful innovation.

Why do strong property rights promote growth?

They allow people to keep the benefits of investment, innovation, and entrepreneurship.

What property-right problem did Hernando de Soto identify?

Many people cannot establish formal legal title to property they informally own.

Why is formal legal title important?

It lets property be protected, transferred, or used as collateral for financing.

What is first-mover advantage?

Benefits from entering a market before competitors, such as experience, loyalty, and early resource access.

What is political risk?

The possibility that political decisions, conflict, or instability will harm a business.

What is economic risk?

The possibility that poor economic management or conditions will harm business operations.

What is legal risk?

Risk arising from weak laws, courts, contracts, or property-right protection.

Weak intellectual-property protection creates which risk?

Legal risk.

What makes a country attractive for business?

Strong property rights, market-based policies, reliable laws, useful resources, manageable costs, and acceptable risks.

What is correlation?

A relationship in which two variables change together.

What is causation?

A relationship in which one factor directly produces a change in another.

Does correlation between democracy and wealth prove democracy causes wealth?

No. Wealth may encourage democracy, democracy may support growth, or other factors may influence both.