Chapter 3 Flashcards
political economy
interdisciplinary study of interactions or relationships between production and trade and power and politics
comparative advantage
each nation has an economic advantage relative to other nations for the production of some goods
economic nationalism
philosophy of economic development that privileges the protection of the national economy from foreign competition
keynesian economics
policies to stimulate economic growth through state intervention in market processes, based on the idea that capitalist markets require state regulation to correct problems that emerge from the operation of free markets
cold war
period of geopolitical tension between the soviet union and the united states and their respective allies 1947 until 1991
development economics
new branch of economics that emerged after WW2 that is specifically concerned with the challenges of developing countries
big push
a theory of economic development in which large investments are made in critical industries
infrastructure investments
large infrastructure investments were seen as necessary part of “big push” theories of development
linkages
strategic industry can stimulate the development of other industries
superfluous consumption
consumption of luxury imported goods in developing countries contributed little to development
theory of surplus labor
economic theory that argued that development would imply the movement of under-employed from rural areas to cities
income elasticity of demand
measures the responsiveness of the demand for a good or service to a change in the buyers income, calculated as the ratio of percentage change in quantity demanded to the percentage change in income
declining terms of trade
value of exported commodities declines relative to the value of imported manufactured goods over time, key argument for industrialization
stop and go pattern
repeated contraction and expansion of economic growth in developing countries caused by balance of payment crisis
individual initiative
individuals acting on their own initiative and in response to price signals economic growth
trade protectionism
use of tariff barriers and other instruments to protect domestic economies from international competition
dirigiste dogma
dismissive term to characterize the then accepted wisdom of development economists that the state should lead development
rent-seeking
theory which suggests that state intervention distorts the incentives for private enterprise by encouraging them to lobby for protection from governments instead of investing in becoming a more competitive business
washington consensus
A tacit agreement between the International Monetary Fund, the World Bank, and the US
executive branch over the development policies that developing countries should follow. This
neoliberal orthodoxy formed around the key issues of macroeconomic prudence, exportoriented growth, and economic liberalization.
developmental state
state that was successfully able to push development forward, professionalized bureaucracies that were autonomous from social and political pressures
new institutional economics (nie)
subfield of economics that examines how institutions affect economic outcomes
institutional economics
recognizes important role of institutions in underwriting markets
transaction costs
economic costs of performing a market transaction
path dependence
some institutions (formal or informal) continue to operate over a long period of time
