Comparative Economic Development Flashcards

Flashcards covering Comparative Economic Development & Classic Theories of Economic Growth and Development

Per Capita Income

The most common way to define the developing world, based on levels of Gross National Income (GNI) per capita.

Degree of International Indebtedness

Classifies countries based on how much they owe internationally, indicating financial vulnerability.

Human Development Index (HDI)

Measures socioeconomic development based on life expectancy, knowledge, and standard of living.

Least Developed Countries (LDCs)

Countries with low income, low human capital, and high economic vulnerability, as designated by the UN.

World Bank

An organization that provides development funds to developing countries through loans, grants, and technical assistance.

Basic Indicators of Development

Real income per capita adjusted for purchasing power, life expectancy, undernourishment, child mortality, literacy, and schooling.

Purchasing Power Parity (PPP)

The number of units of a foreign country’s currency required to purchase the identical quantity of goods and services in the local developing country market as $1 would buy in the United States.

Gross National Income (GNI) per capita

The most common measure of the overall level of economic activity, calculated as the total domestic and foreign value added claimed by a country’s residents.

Gross Domestic Product (GDP)

The total value for final use of output produced by an economy, by both residents and nonresidents.

Life Expectancy

The average number of years newborn children would live if subjected to the mortality risks prevailing for their cohort at the time of their birth.

Undernourishment

Consuming too little food to maintain normal levels of activity; often called hunger.

Child Mortality

Measured by the number of deaths per 1,000 live births for children under the age of five.

Literacy

The fraction of adult males and females reported or estimated to have basic abilities to read and write.

Educational Attainments

The levels of education (measured by literacy) and schooling achieved by a population.

Three Goals of Development

A long and healthy life, knowledge, and a decent standard of living.

Characteristics of the Developing World

Lower levels of living and productivity, lower levels of human capital, higher levels of inequality and poverty, higher population growth rates, and others.

External Dependency

Developing nations are often in a disadvantaged and subordinate position in international relations.

Divergence

A trend where richer countries grow faster than poorer ones, widening the income gap over time.

Convergence

A trend where poorer countries grow faster than richer ones, narrowing the income gap over time.

Conditional Convergence

Convergence that occurs only when countries have similar conditions like savings rates, population growth, and technology.

The Linear-Stages-of-Growth Model

Proposes that all countries pass through a series of five distinct stages to achieve economic development.

Theories and Patterns of Structural Change

Significant shifts in the composition of an economy, particularly involving the reallocation of economic activity across sectors.

The International-Dependence Revolution

Developing nations were locked in a system of dependence, exploited by richer countries.

The Neoclassical, Free-market Counterrevolution

Emphasizes free markets and minimal government intervention.

Rostow’s Stages of Growth

States that the transition from underdevelopment to development can be described as a series of steps or stages.

The Harrod-Domar Growth Model

A functional economic relationship where the growth rate of GDP depends on the national net savings rate and inversely on the national capital-output ratio.

Capital-output ratio

A ratio that shows the units of capital required to produce a unit of output over a given period of time.

Net savings ratio

Expressed as a proportion of disposable income over some period of time.

Necessary condition

A condition that must be present for an event to occur, even though it is not sufficient.

Sufficient condition

A condition that guarantees that an event will or can occur.

Structural formation

Transforming economy so manufacturing contributes more to national income than agriculture.

Surplus Labor

Excess supply of labor, particularly in rural areas with marginal productivity of zero or negative.

Lewis Turning Point

The point at which all surplus rural labor is absorbed in the new industrial sector in the Lewis model.

Dependence

Reliance of developing countries on developed-country economic policies.

Dominance

Developed countries have much greater power than less developed countries in international economic decisions.

The False-Paradigm Model

Attributes underdevelopment to faulty advice from international experts.

Dualism

Coexistence of two kinds of economic and social systems within one nation.

Free market Analysis

Under-development results from poor resource allocation and too much state intervention.

Public Choice Theory

Assumes that politicians, bureaucrats, citizens act from a self-interested perspective.

Market Friendly Approach

Government facilitating markets through nonselective interventions.

Capital Accumulation

New investments in land, physical equipment, and human resources.

Neutral technological progress

Higher output levels are achieved with the same quantity and combinations of factor inputs.