4.3 - Emerging and developing economies Flashcards
Advanced economies
4.3.1 - Measures of development
Acording to the IMF there are 41 advanced economies with 28 being in Europe
Aid
4.3.1 - Measures of development
Overseas development assistance from one country to another. Might take the form of humanitarian assistance, technical expertise and project aid etc.
BRICS economies
4.3.1 - Measures of development
The BRICS grouping - Brazil, Russia, India, China and South Africa - has become short-hand for the rise of emerging markets in the global economy
BRICS development bank
4.3.1 - Measures of development
BRICS New Development Bank (NDB) was launched in 2015. The NDB will lend money to developing countries to help finance infrastructure projects. The NDB is an alternative to the World Bank and also the International Monetary Fund (IMF)
Capital flows
4.3.1 - Measures of development
Movements of capital between countries. Outward capital flows are movements of domestically owned capital abroad; inward capital flows are movement of foreign-owned capital to the domestic economy
Economic development
4.3.1 - Measures of development
Progress in expanding economic freedoms, a sustained improvement in economic and social opportunities and growth in personal and national capabilities
Economic structure
4.3.1 - Measures of development
The balance of output, incomes and employment drawn from different sectors - ranging from primary (farming, fishing, mining) to secondary (manufacturing and construction indsutries) to tertiary and quaternary sectors (tourism, banking, software industries)
Emerging economy
4.3.1 - Measures of development
Typically, a lower to middle income country that is progressing toward becoming more advanced, usually by means of rapid growth, urbanization and industrialization
Genuine Progress Indicator (GPI)
4.3.1 - Measures of development
An attempt to measure whether a country’s growth, increased production of goods, and expanding services have actually resulted in the improvement on the welfare (or well-being) of the people in the country
Gross Domestic Product per capita
4.3.1 - Measures of development
National income per head of population = total GDP/total population
Gross Domestic Product
4.3.1 - Measures of development
The total value of an economy’s domestic output of goods and services
Gross National Income (GNI)
4.3.1 - Measures of development
This is broadly the same as GDP except that it adds what a country earns from overseas investments and subtracts what foreigners earn in a country and send back home. GNi is affected for example for profits from businesses owned overseas and also remittances sent home by migrant workers
Hard infrastrucutre
4.3.1 - Measures of development
Examples include power, transport and telecommunications systems
Heavily Indebted Poor Countries Initiative
4.3.1 - Measures of development
A global initiative to provide external debt relief to heavily indebted low-income countries
Human Development Index
4.3.1 - Measures of development
The HDI has become the most widely used measure for communicating a country’s development status. HDI is a broad measure of development, since it captures not only the level of per capita income but also incorporates measures of health (life expectancy) and education (school enrolment and literacy rate)
Humanitarian Aid
4.3.1 - Measures of development
Emergency disaster relief, food aid, refugee relief and disaster preparedness
Inclusive Wealth Index
4.3.1 - Measures of development
Assesses changes in a country’s productive base, including produced, human, and natural capital over time
Income distribution
4.3.1 - Measures of development
Income distribution is how income is divided up among all the citizens in a country. The most common measure of income distrbution is the Gini Coefficient
Inequality-adjusted HDI
4.3.1 - Measures of development
The IHDI takes into account not the average achievements of a country on health, education, and income, and how those achievements are distributed among its citizens by “discounting” each dimension’s average value according due to its level of inequality. The average world loss in HDI due to inequality is about 23% - ranging from 5% (Czech Republic) to 43.5% (Namibia)
Informal sector
4.3.1 - Measures of development
The sector of the economy, normally comprising of small businesses, which is unregistered with the tax authorities
Infrastructure
4.3.1 - Measures of development
The transport links, communications networks, sewage systems, energy plants and other facilities essential for the efficient functioning of a country and its economy
Intellectual Property
4.3.1 - Measures of development
Private property rights over ideas and inventions including copyrights, patents, trademarks and other industrial designs
Least Developed Countries (LDCs)
4.3.1 - Measures of development
A group of countries that have been classified by the United Nations as least developed in terms of thier low gross domestic product (GDP) per capita, weak human assets and high degree of economic vulnerability
Living standards
4.3.1 - Measures of development
The baseline measure for the standard of living is real national income per capita measured at constant prices and adjusted for purchasing power parity i.e. real GNI per capita ($) at PPP
Natural capital
4.3.1 - Measures of development
The stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. Natural capital may also provide services like recycling wastes or water catchment and erosion control
Overseas assets
4.3.1 - Measures of development
Assests such as businesses, shares, property which are owned in overseas countries and which might generate a flow of investment income which is a credit item on the pirmary income account of the balance of payments
Primary sector
4.3.1 - Measures of development
An industry involved in the production of raw materials including agriculture
Soft infrastructure
4.3.1 - Measures of development
The financial system and regulation, education system, the legal framework, socail networks, values and other intagible structures in an economy
Subsistence farming
4.3.1 - Measures of development
Farming where ouptut is produced for consumption of the farmer and its family members and not for cash sale
Sustainable development
4.3.1 - Measures of development
To leave future generations the option or capacity to be as well off as we are
Sustainable growth
4.3.1 - Measures of development
Growth which meets the needs of the present without comprimising the ability of future generations to meet their own changing needs and wants. Each generation should bequeath to its successor at least as large a productive base as it inherited
Trend growth
4.3.1 - Measures of development
Trend growth is the long term non-inflationary increase in output (GDP) caused by an increase in a country’s productive capacity i.e. LRAS
Trickle down
4.3.1 - Measures of development
The process whereby the economic gains from economic growth pass down throughout the entire society eventually giving rise to inclusive development
Bilateral aid
4.3.2 - Factors influencing growth and development
Aid (development assistance) that flows from one country to another
Brain drain
4.3.2 - Factors influencing growth and development
The movement of highly skilled or professional people from their own country to another country where they can earn more money
Buffer stock
4.3.2 - Factors influencing growth and development
Buffer stock schemes seek to stabilize the market price of agricultural products by buying up supplies of the product when harvests are plentiful and selling stocks onto the market when supplies are low
Capital flight
4.3.2 - Factors influencing growth and development
The rapid movement of large sums of money out of a country. There could be several possible reasons - lack of confidence in a country’s economy and/or its currency and political turmoil. Capital flight occurs when owners of liquid assets move them to other countries perceived as safe havens or as offering better returns. It can be legal of illegal
Corruption
4.3.2 - Factors influencing growth and development
The abuse of entrusted power for private gain, a key cause of government failure
Corruption Perceptions Index
4.3.2 - Factors influencing growth and development
Ranks countries/territories based on how corrupt thier public sector is percieved to be. It is a composite index, a combination of polls, drawing on corruption-related data collected by a varitey of reputable institutions
Development traps
4.3.2 - Factors influencing growth and development
Built on the research of Professer Paul Collier. 4 development traps are:
* Conflict
* Reliance of natural resources
* Being landlocked with bad neighbours
* Bad governance/institutions
Exogenous shock
4.3.2 - Factors influencing growth and development
An unexpected event beyond the control of the country’s officials that has a large negative impact on its economy
External debt
4.3.2 - Factors influencing growth and development
External debt is owed by governments, housholds and businesses in a country to external (overseas) creditors. Examples include government bonds sold to foregin investors and private sector credit from foreign banks. The scale of external debt is measued as a % of a country’s GNI
Fertility rate
4.3.2 - Factors influencing growth and development
Average number of children a woman will have in her lifetime, by country or region
Foreign currency gap
4.3.2 - Factors influencing growth and development
This is when a country outflows persistently exceed currency inflows, for example when a country is running a persistent current account deficit
Harrod-Domar growth model
4.3.2 - Factors influencing growth and development
An idea that aggregate output (GDP) is proportional to the stock of physical capital. Investment is assumed proportional to output which implies that it is also proportional to the capital stock. Thus, some fraction of output is invested, which addes to the capital stock, which increases output
Human capital
4.3.2 - Factors influencing growth and development
The skills, experience, attitudes, aptitudes of the human input into production
Human capital flight
4.3.2 - Factors influencing growth and development
Another name for brain drain - when a country suffers net outward migration of skilled/younger workers which causes their labour force to contract and may have a damaging effect on the level of labour productivity
Import substitution
4.3.2 - Factors influencing growth and development
Replacement of imports by domestic production, perhaps protected using tariffs
Infrastructure
4.3.2 - Factors influencing growth and development
The transport links, communications networks, sewage systems, energy plants and other facilities essential for the efficient funcitoning of a country and its economy
Primary product dependency
4.3.2 - Factors influencing growth and development
Heavy dependence measured as a share of GDP, total exports or employment from the extraction/cultivation of primary commodities such as copper and oil
Produced capital
4.3.2 - Factors influencing growth and development
Machines, buildings, physical infrastructure. Also known as fixed capital
Property rights
4.3.2 - Factors influencing growth and development
Rights to ownership of an esset such as land or ideas (intellectual property rights)
Protectionism
4.3.2 - Factors influencing growth and development
Tariff and non-tariff restrictions on imports to protect domestic producers
Resource efficiency
4.3.2 - Factors influencing growth and development
Achieving more with less, i.e. producing more goods and services but with a lower environmental footprint
Resource rent
4.3.2 - Factors influencing growth and development
Resource rent is a measure of the financial return from operating in a natural resource industry - for example in the fishing sector, it is what remains after fishing costs and subsidies are deducted from revenue
Savings gap
4.3.2 - Factors influencing growth and development
Savings are needed to finance capital investment. In many smaller low-income countries, high levels of extreme poverty make it difficult to generate sufficient savings to provide the funds needed to fund investment projects. This increases reliance on aid or borrowing from overseas. This problem is known as the savings gap
Savings surplus
4.3.2 - Factors influencing growth and development
The excess of aggregate savings over domestic investment, where investment is in fixed capital and inventories by both the public and private sector
Accelerator effect
4.3.3 - Strategies influencing growth and development
Where planned capital investment is linked positivelt to the past and expected growth of consumer demand
Aid
4.3.3 - Strategies influencing growth and development
Overseas development assistance from one country to another. Might take the form of humanitarian assistance, technical expertise and project aid etc.
Aid effectiveness
4.3.3 - Strategies influencing growth and development
A measure of the quality of aid delivery and maximizing the impact of aid on extreme poverty reduction and sustianable economic development
Buffer stock
4.3.3 - Strategies influencing growth and development
Buffer stock schemes seek to stabilize the market price of agricultural products by buying up supplies of the product when harvests are plentiful and selling stocks onto the market when supplies are low
Debt forgiveness
4.3.3 - Strategies influencing growth and development
The cancelling by a creditor or a debt to country or a company
Debt relief
4.3.3 - Strategies influencing growth and development
Cancellation, rescheduling, refinancing of a nation’s external debts
Environmental tax
4.3.3 - Strategies influencing growth and development
A tax on a good or service, which is judged to be detrimental to the environment. It may also be a tax on a factor input used to produce (supply) that final product
Fairtrade
4.3.3 - Strategies influencing growth and development
Trade between companies in developed countries and producers in developing countries in which fair prices are paid to the producers
Foreign direct investment
4.3.3 - Strategies influencing growth and development
FDI is the acquistion of a controlling interest in productive operations abroad by businesses resident in the home economy. May invovle the creation of new productive capactity such as a new factory or building of infrastructure
Green development
4.3.3 - Strategies influencing growth and development
A pattern of development that decouples growth from heavy dependence on resource use, carbon emissions and environmental damage, and promotes growth through the creation of new green product markets, technologies, investments, and changes in consumption and conservation behaviour
Gross saving rate
4.3.3 - Strategies influencing growth and development
Gross sacing = GDP minus consumption by government and the private sector, expressed as a percentage of GDP. A high gross domestic saving rate usually indicates a country’s high potential to invest in capital
Human capital
4.3.3 - Strategies influencing growth and development
Human capital is a measure of individuals’ skills, knowledge, abilities, social attributes, personalities and health attributes. These factors enable individuals to work, and therefore produce something of economic value
International Monetary Fund (IMF)
4.3.3 - Strategies influencing growth and development
Inter-governmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments
Joint venture
4.3.3 - Strategies influencing growth and development
Agreement between two or more companies to cooperate on a particular project or a business that services their mutual intersts. E.g. Google and NASA (Google Earth)
Lewis model
4.3.3 - Strategies influencing growth and development
Arthur Lewis put forward a development model of a dualistic economy, consisting of rural agricultural and urban manufacturing sectors. It is a model of structural change as it outlines the development from a traditional economy to an industrialised one
Micro-credit/micro-finance
4.3.3 - Strategies influencing growth and development
Any form of credit service offered to low-income individuals not traditonally serviced by the formal banking sector
Middle income trap
4.3.3 - Strategies influencing growth and development
Occurs when a country’s growth stagnates after reaching middle income levels. The problem arised when developing economies find themselves stuck in the middle, with rising wage and declining costs competitiveness, unable to compete with advnaced economies in high-skill innovations, or with low-income, low-wage economies in the cheap production of manufactured goods
Multilateral Aid
4.3.3 - Strategies influencing growth and development
Aid channelled through international bodies such as Oxfam or Save the Children for use in or on behalf of aid recipient countries
Net inward migration
4.3.3 - Strategies influencing growth and development
When the number of migrants coming into a country is greater than those leaving in a given time period
NGOs
4.3.3 - Strategies influencing growth and development
Private non-profit making bodies which are active in development work
ODA
4.3.3 - Strategies influencing growth and development
Abbreviation for official development assistance
OECD
4.3.3 - Strategies influencing growth and development
Organisation of Economic Co-operation and Development - the group of leading advanced, high-income countries
Off-shore banking
4.3.3 - Strategies influencing growth and development
Banks based abroad in a country where you pay less tax
Official Development Assistance
4.3.3 - Strategies influencing growth and development
Loans, grants, and technical assistance provided to developing countries
Outward oriented development
4.3.3 - Strategies influencing growth and development
Government policy that attempts to achieve development by encouraging free trade and the unrestricted movement of labour and capital
Privatisation
4.3.3 - Strategies influencing growth and development
Selling off a state-run industry to the private sector
Protectionism
4.3.3 - Strategies influencing growth and development
Tariff and non-tariff restrictions on imports to protect domestic producers
Regional Development Banks
4.3.3 - Strategies influencing growth and development
Development Banks which serve particular regions e.g. the African Development Bank or European Bank for Reconstruction and Development
SEZ
4.3.3 - Strategies influencing growth and development
Abbreviation for special economic zones - areas set up by the government offering tax incentives in a bid to attract inward investment and new jobs
Soft loan
4.3.3 - Strategies influencing growth and development
A loan made to a country on concessionary basis with a lower rate of interest
Trade liberalisation
4.3.3 - Strategies influencing growth and development
Reductions in import tariffs and non-tariff barriers to enhance trade between one or more countries
World Bank
4.3.3 - Strategies influencing growth and development
The World Bank promotes the institutional, structural and social development of Less Developed Countris (LDCs) providing low interest loans for domestic investment projects and technical assitance
