TOPIC 1: Introducing Economic Development: A Global Perspective

Absolute Poverty

A situation where individuals or families are unable to meet the minimum levels of income, food, clothing, health care, shelter, and other essential necessities for survival, often defined as living on less than 2 per day.

Gross National Income (GNI)

The total domestic and foreign output claimed by residents of a country. It includes gross domestic product (GDP) plus factor incomes accruing to residents from abroad, less the income earned in the domestic economy accruing to persons abroad.

Income Per Capita

The total gross national income (GNI) of a country divided by its total population.

Traditional Economics

Primarily concerned with the efficient, least-cost allocation of scarce productive resources and their optimal growth over time to produce an ever-expanding range of goods and services, often assuming perfect markets and rational, self-interested behavior.

Political Economy

Extends beyond traditional economics to study the social and institutional processes through which specific economic and political elites influence the allocation of scarce productive resources, emphasizing the role of power in economic decision-making.

Development Economics

Encompasses traditional concerns of efficient resource allocation and sustained growth, but also addresses the economic, social, political, and institutional mechanisms needed to achieve rapid and large-scale improvements in living standards for people in developing countries.

Developing Countries

Countries in Asia, Africa, the Middle East, Latin America, Eastern Europe, and the former Soviet Union that are currently characterized by low levels of living and other development deficits; often used synonymously with "less developed countries."

More Developed Countries (MDCs)

The economically advanced capitalist nations of Western Europe, North America, Australia, New Zealand, and Japan.

Globalization

The increasing integration of national economies into expanding international markets.

Microfinance

The provision of financial services (such as small loans, savings accounts, and insurance) to low-income individuals or groups who typically lack access to traditional banking services, aimed at reducing poverty and spurring grassroots development.

Social System

The organizational and institutional structure of a society, encompassing its values, attitudes, power structure, and traditions.

Values

Principles, standards, or qualities that a society or groups within it considers worthwhile or desirable.

Attitudes

The states of mind or feelings of an individual, group, or society regarding issues such as material gain, hard work, saving for the future, and sharing wealth.

Institutions

Norms, rules of conduct, and generally accepted ways of doing things. Economic institutions are humanly devised constraints that shape human interactions, including both informal and formal "rules of the game" of economic life.