Concepts and Terms Unit 3

Question 1

Absolute Poverty

Answer 1

Absolute poverty is a term conceived by the UN in 1995 to refer to a condition of severe deprivation of basic needs including food, safe water, sanitation, health facilities, shelter, education and information. It is not only contingent on income but also access to services. The reduction of absolute poverty was the first of the MDGs.

Question 2

Advanced Economy

Answer 2

Advanced economy is a term used by the IMF to describe countries with a high GDP/capita, a significant degree of industrialization and advanced technological infrastructure.

Question 3

Anthropocene

Answer 3

The anthropocene is a proposed epoch (notable time period) dating from the commencement of significant human impact on the Earth’s geology and ecosystems. This proposal is based on the evidence that the Earth’s system processes, including atmospheric, geologic, hydrologic and biospheric, are now significantly altered by human activity. This is often connected to the epoch responsible for climate change.

Question 4

Asian Tigers

Answer 4

The term Asian Tigers refers to Hong Kong, Singapore, South Korea and Taiwan, four countries that maintained incredibly high economic growth rates between the 1960s and 1990s. This growth was fueled by exports and rapid industrialization and allowed them to become some of the world’s wealthy economies.

Singapore and Hong Kong are seen as leading foreign financial hubs, while Taiwan and South Korea are pioneers in the manufacture of electronic components and computers. Their economic growth serves as a model for many developing nations, particularly Southeast Asia’s Tiger Cub Economies (Indonesia, Philippines, Malaysia, Thailand, and Vietnam).

Question 5

Bretton Woods Conference (1944)

Answer 5

The Bretton Woods Conference, officially the United Nations Monetary and Financial Conference, was a meeting of delegates from 44 nations to establish the international monetary and financial order after WWII. The International Bank for Reconstruction and Development (later became the World bank) and the International Monetary Fund were established from this meeting.

Question 6

BRICS

Answer 6

BRICs is an acronym for a group of five major emerging economies: Brazil, Russia, India, China and South Africa. These five countries comprise over 40% of the world’s population and have a 30% share of the world GDP.

→ BRICS started in 2001 as BRIC, an acronym coined by Goldman Sachs for Brazil, Russia, India, and China. South Africa was added in 2010.
→ The notion behind the coinage was that the nations’ economies would come to collectively dominate global growth by 2050.
→ The BRICS nations offered a source of foreign expansion for firms and strong returns for institutional investors.
→ The party had largely ended by 2015, when Goldman closed its BRICS-focused investment fund.

Question 7

Capitalism

Answer 7

Capitalism is an economic system centered on the private ownership of the means of production and distribution for profit. The production of goods and services is based on supply and demand in the free market.

Question 8

Circular Economy

Answer 8

A circular economy is one in which resources are kept in use for the maximum possible amount of time, encouraging sustainability. Rather than a linear economy of production, use and disposal, a circular economy will recycle products back into new products through the recovery and regeneration of materials at the end of their service life.

In a circular economy, products are made to last longer, communities share resources and save money, and businesses are maintaining, reusing, remanufacturing and recycling materials to create more value for you and future generations.

Question 9

Civil Society

Answer 9

Civil society is the term used to refer to social relations and organizations outside of the state or government.

The term “civil society” refers to a wide range of non-government, non-profit, and voluntary-driven organizations, as well as social movements, through which people organize to pursue shared interests, values, and objectives in public life. These actors are found at the international, regional, national and community levels and are recognized as independent actors in their own right.

Question 10

Commodity

Answer 10

A commodity is an economic good or service.

Question 11

Conditionality

Answer 11

Conditionality is the attachment of conditions to loans, aid or debt relief. SAPs are an example of conditionality in that certain policies had to be adopted in order to be eligible for financing.

SAPs are Structural Adjustment Programs the consist of loans provided by the IMF and World Bank. Structural adjustments are often a set of economic policies, including reducing government spending, opening to free trade, and so on. Structural adjustments are commonly thought of as free market reforms, and they are made conditional on the assumption that they will make the nation in question more competitive and encourage economic growth.

Some actions include:
→ Devaluing their currencies to reduce balance of payments deficits.
→ Cutting public sector employment, subsidies, and other spending to reduce budget deficits.
→ Privatizing state-owned enterprises and deregulating state-controlled industries.
→ Easing regulations in order to attract investment by foreign businesses.
→ Closing tax loopholes and improving tax collection domestically.

Question 12

Copenhagen Accord (2009)

Answer 12

The Copenhagen Accord was signed at COP15 and provided explicit pledges by all major economies to reduce emissions. It did not, however, provide a binding pathway towards meeting commitments.

Question 13

Corruption

Answer 13

Corruption is unethical or dishonest conduct by a person in a position of authority, often for personal gain.

Question 14

Cultural Globalization

Answer 14

Cultural globalization is the increasing transfer of ideas, values and culture though increasing global interconnectedness. The Internet, travel and media have fueled the spread of information, allowing people to extend their social relationships.

Question 15

Decolonization

Answer 15

Decolonization is the undoing of colonialism by granting independence and sovereignty to previously colonized nations.

Question 16

Development

Answer 16

Development is a sustained increase in the standard of living and well-being of a level of social organization. Many consider it to involve increased income; better access to basic goods and services; improvements in education, healthcare and public health; well-functioning institutions; decreased inequality; reduced poverty and unemployment; and more sustainable production and consumption patterns.

Question 17

Doha Development Round

Answer 17

The Doha Development Round was a trade negotiation round of the WTO, which started in 2001. The objective of the round was to lower trade barriers around the world in order to facilitate more global trade.

Question 18

EAGLEs

Answer 18

EAGLEs stands for emerging and growth-leading economies. The EAGLE economies are expected to lead global growth over the coming decade. This is a grouping of key markets recognized by BBVA Research and is mainly for investors. In a recent annual report, Turkey was seen as an investment opportunity.

Question 19

Economic and Social Council (ECOSOC)

Answer 19

The United Nations ECOSOC is one of the six principal organs of the UN and it is responsible for the coordination of the economic, social and related work of specialized agencies.

“At the centre of the UN development system, we conduct cutting-edge analysis, agree on global norms and advocate for progress. Our collective solutions advance sustainable development.”

The Economic and Social Council (ECOSOC) coordinates the work of the 17 UN specialized agencies, 9 functional commissions and 6 regional commissions, receives reports from nine UN funds and programmes (see reverse) and issues policy recommendations to the UN system and to Member States.

Under the UN Charter, ECOSOC is responsible for promoting higher standards of living, full employment, and economic and social progress; identifying solutions to international economic, social and health problems; facilitating international cultural and educational cooperation; and encouraging universal respect for human rights and fundamental freedoms. ECOSOC’s purview extends over 70 percent of the human and financial resources of the entire UN system.

Question 20

Economic Development

Answer 20

Economic development refers to the development of a country’s economy though greater industrialization and growth of GDP. Traditionally, development was measured primarily in economic terms.

Question 21

Economic Globalization

Answer 21

Economic globalization refers to the process whereby all national economies have, to a certain extent, been absorbed into an interlocking global economy.

Question 22

First World

Answer 22

First World is generally understood to refer to developed, capitalist, industrial countries. The term originated during the Cold War to refer to countries aligned with NATO as opposed to the Soviet Union.

Question 23

Foreign Direct Investment

Answer 23

Foreign direct investment (FDI) is a category of cross-border investment in which an investor resident in one economy establishes a lasting interest in and a significant degree of influence over an enterprise resident in another economy. Ownership of 10 percent or more of the voting power in an enterprise in one economy by an investor in another economy is evidence of such a relationship. FDI is a key element in international economic integration because it creates stable and long-lasting links between economies. FDI is an important channel for the transfer of technology between countries, promotes international trade through access to foreign markets, and can be an important vehicle for economic development.

FDI is the investment in one country by individuals or companies based entirely in another country. This can be through the establishment of business operations or the acquisition of business assets in the other country. FDI involves the foreign investor having ownership or majority control of the investment.

Question 24

G8

Answer 24

The Group of Eight (G8) refers to an intergovernmental political forum made up of eight highly industrialized economies. The members are the United States, Japan, Russia, Italy, Germany, the United Kingdom, France and Canada. Russia was suspended in 2014.

Question 25

Gini Coefficient

Answer 25

The Gini Coefficient is a statistical method of modelling and graphing the extent of wealth inequality in a society. It measures the difference between the incomes of the richest and poorest, and how many people earn how much along the spectrum. The Gini Coefficient is expressed as a number between 0 and 1, with 0 being perfect equality. The Gini coefficient is used to complement the picture provided by GDP per capita.

Global inequality, as measured by the Gini index, has steadily increased over the past few centuries and spiked during the COVID-19 pandemic. Because of data and other limitations, the Gini index may overstate income inequality and can obscure important information about income distribution.

Usually wealthier European countries have a lower index while corrupt countries have a higher index.

The US has a gini coefficient of 41.1% which is debated to be rather high for such a developed country

Question 26

Globalization

Answer 26

Globalization is the increased interaction and interconnectedness of people, economies and states through the growth in international trade, and flow of ideas and culture.

Question 27

Global north and south

Answer 27

The Global north and south are terms increasingly used in postcolonial studies to refer to developed and developing countries respectively. The North-South divide is generally considered to be both a socio-economic and political divide.

Question 28

Gross National Income

Answer 28

Gross National Income (GNI) is the total amount of money earned by a nation’s people and businesses.

GNI can be calculated by adding income from foreign sources to the country’s gross domestic product.

Question 29

Gross Domestic Product

Answer 29

Gross Domestic Product is the value of all final goods and services produced in a country in one year. GDP gives a good idea of the size of a country’s economy as it measures income and growth. It does not take into account any other possible metrics of development.

Question 30

Gross Domestic Product per capita

Answer 30

GDP per capita is the total value of all final goods and services produced in a country in one year divided by the population of the country. This calculation gives an average income per person. If GDP per capita is increasing it indicates that the economy is growing. However, this measure does not consider equality of income.

Question 31

Happy Planet Index

Answer 31

The Happy Planet Index combines four elements (life expectancy, experienced well-being [people’s feeling during the moment], inequality of outcomes [difference in economic conditions] and ecological footprint) to show how efficiently residents of different countries are using environmental resources to lead long, happy lives.

Question 32

Heavily Indebted Poor Countries

Answer 32

The HIPC are a group of developing countries with high levels of poverty and debt which are able to access special assistance from the International Monetary Fund and the World Bank. The HIPC initiative was started in 1996 and was designed to ensure that the poorest countries are not overwhelmed by the debt burdens they carry. Eligible countries can receive some debt relief.

Question 33

Human Development

Answer 33

Human development, a concept put forward by Mahbub ul Haq, is defined as the process of expanding people’s freedoms and opportunities and improving their well-being. It is an approach to development that goes beyond economic metrics to ensure that people, as well as economies, are seeing progress and improvement. Human development is about the real freedom ordinary people have to decide who to be, what to do, and how to live.

Question 34

Human Development Index (HDI)

Answer 34

The Human Development Index (HDI) is a summary measure of average achievement in key dimensions of human development: a long and healthy life, being knowledgeable and having a decent standard of living. The HDI is the geometric mean of normalized indices for each of the three dimensions.

The health dimension is assessed by life expectancy at birth, the education dimension is measured by mean of years of schooling for adults aged 25 years and more and expected years of schooling for children of school entering age. The standard of living dimension is measured by gross national income per capita. The HDI uses the logarithm of income, to reflect the diminishing importance of income with increasing GNI. The scores for the three HDI dimension indices are then aggregated into a composite index using geometric mean.

Question 35

Human Development Report

Answer 35

The Human Development Report is published annually by the UNDP to measure and analyze development. The metric used for measurement is the Human Development Index.

Question 36

Import Substitution Model

Answer 36

Import substitution industrialization (ISI) is an economic policy that prioritizes the production of goods in the domestic market rather than importing them from other countries. ISI looks to reduce dependency on other countries, increase self-sufficiency and boost local industrial processes.

The primary goal of the import substitution industrialization theory is to protect, strengthen, and grow local industries using a variety of tactics, including tariffs, import quotas, and subsidized government loans. Countries implementing this theory attempt to shore up production channels for each stage of a product’s development.

→ Import substitution industrialization is an economic theory adhered to by developing countries that wish to decrease their dependence on developed countries.
→ ISI targets the protection and incubation of newly formed domestic industries to fully develop sectors so the goods produced are competitive with imported goods.
→ Developing countries began to reject ISI policy in the 1980s and 1990s.

Question 37

Comparative Advantage

Answer 37

Comparative advantage is an economy’s ability to produce a particular good or service at a lower opportunity cost than its trading partners. Comparative advantage is used to explain why companies, countries, or individuals can benefit from trade.

Opportunity Cost: Opportunity costs represent the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another.

Question 38

Inclusive Wealth Index

Answer 38

The Inclusive Wealth Index (IWI) is a measure of development that seeks to include the problems of the social, economic and environmental aspects of development. The IWI measures a countries wealth using three parameters. These are progress, well-being and long-term sustainability.

Inclusive Wealth Index “provides a tool for countries to measure whether they are developing in a way that allows future generations to meet their own needs”

Question 39

Inequality

Answer 39

Inequality refers to a state of affairs where equality between people or groups of people is not realized and the consequent potential compromises of justice and liberty. Inequality often manifests itself through unequal access to resources that are needed to sustain life and develop individuals and communities. Consequently, the concept is closely connected to discussions of power and of who holds the rights to these resources and their proceeds. Inequality can be examined both as a phenomenon within and between societies.

Question 40

International Monetary Fund

Answer 40

The International Monetary Fund, born out of the Bretton Woods Conference, is an international organization which seeks to foster global monetary cooperation, facilitate trade, reduce poverty and secure financial stability. The IMF provides developing nations with financing and policy advice to help them achieve economic stability.

Question 41

Kyoto Protocol (1997)

Answer 41

The Kyoto Protocol is an international agreement in the UN Framework Convention on Climate Change. It commits the parties by setting internationally binding emission reduction targets. It was the first international agreement in which many of the world’s industrial nations committed to greenhouse gas emissions reductions.

Question 42

LEDC

Answer 42

LEDC stand for Less Economically Developed Country. LEDCs are generally characterized by low GDP/capita, less robust economies focused on the production of raw materials, low levels of industrialization and minimal advanced technological infrastructure.

Question 43

Marshall Plan (1948)

Answer 43

The European Recovery Program, or Marshall Plan, was an American economic recovery initiative to assist in the rebuilding of Western Europe after WWII. The plan was designed to rehabilitate the economies of 17 Western European countries through massive capital investment.

Question 44

MEDC

Answer 44

MEDC stands for More Economically Developed Country. It refers to countries with a high GDP/capita, highly developed economy, advanced technological infrastructure and high levels of industrialization.

Question 45

Millennium Development Goals (MDGs)

Answer 45

The Millennium Development Goals (MDGs) are eight targets agreed to by 189 countries at the the United Nations Millennium Summit in 2000. The MDGs set clear targets and deadlines for improving the lives of the world’s poorest people. The aim of the MDGs was to see all goals achieved by 2015.

1) Eradicate extreme hunger and poverty
2) Achieve universal primary education
3) Promote gender equality and empower women
4) Reduce child mortality
5) Improve maternal health
6) Combat HIV/AIDS Malaria and other diseases
7) Ensure environmental sustainability
8) Global partnership for development

Question 46

MINTs

Answer 46

MINT is an acronym coined by the investment firm Fidelity in 2011 for the countries Mexico, Indonesia, Nigeria and Turkey, which are expected to show strong economic growth and high return for investors over the coming decade.

Question 47

Neo-colonialism

Answer 47

Neo-colonialism refers to control of LEDCs through indirect means including economic, political and cultural pressures.

Question 48

Neoliberalism

Answer 48

Neoliberalism refers to the ideology and policies that emphasize the value of laissez-faire (free-market) economics as the most effective means of allocating resources. This includes the transfer of economic factors from the public to private sector, limiting subsidies and reforming the taxation system.

→ The policies of neoliberalism typically support fiscal austerity ( a policy approach that involves reducing government spending and/or increasing taxes in order to reduce budget deficits and debt), deregulation, free trade, privatization, and a reduction in government spending.
→ Neoliberalism is often associated with the economic policies of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States.
→ There are many criticisms of neoliberalism, including its potential danger to democracy, workers’ rights, and sovereign nations’ right to self-determination.
→ It’s also been accused of giving corporations too much power and worsening economic inequality.
→ However, neoliberal initiatives concerning free trade, industry deregulation, income tax and capital gains tax cuts all had bipartisan support.

Question 49

Odious debt

Answer 49

Odious debt, also known as illegitimate debt, is when a country’s government changes and the successor government does not want to pay debts incurred by the previous government. Usually, successor governments argue that the previous government misappropriated money it had borrowed and that they should not be held responsible for the previous regime’s alleged misdeeds. Legal doctrine holds that odious debt should not be enforceable.

→ Odious debt is a term applied to a predecessor government’s debt that a successor government wishes to repudiate on ostensibly moral grounds.
→ Odious debt is not an established principle of international law, but is often given as a rationale by the victors of civil or international conflict to repudiate their defeat opponents’ debts.
→ The successful application of the concept of odious debt presents a significant risk for investors in sovereign debt and may increase borrowing costs for countries under threat of regime change.

Question 50

OECD

Answer 50

The Organization for Economic Co-operation and Development (OECD) is an intergovernmental organization founded in 1961 to promote economic progress and global trade. It seeks to promote policies that will improve the economic and social well-being of people. There are 38 member countries.

Question 51

Official Development Assistance

Answer 51

Official development assistance (ODA) is defined as government aid designed to promote the economic development and welfare of developing countries. Loans and credits for military purposes are excluded. Aid may be provided bilaterally, from donor to recipient, or channelled through a multilateral development agency such as the United Nations or the World Bank. Aid includes grants, “soft” loans and the provision of technical assistance. Soft loans are those where the grant element is at least 25% of the total. The OECD maintains a list of developing countries and territories; only aid to these countries counts as ODA. The list is periodically updated and currently contains over 150 countries or territories with per capita incomes below USD 12 276 in 2010.

Question 52

Paris Agreement

Answer 52

The Paris Agreement is an agreement within the UN Framework Convention on Climate Change that sets a global action plan to limit global warming within 2 degrees Celsius. The agreement has been signed by all countries, with the exception of the United States, which has withdrawn. All countries agree to work to limit global temperature rise through greenhouse gas emissions mitigation, adaptation and finance. It is a historic agreement in terms of its scope.

Question 53

PIGS

Answer 53

PIGS is an acronym for the economies of the Southern European countries Portugal, Italy, Greece and Spain. The term was first used in the 1990s, during the increased integration of the EU economies, to reference the economic vulnerability and growing debt of these countries. The term is generally considered derogatory.

Question 54

Political Globalization

Answer 54

Political globalization refers to the increasing number of intergovernmental organizations with a global scope. The United Nations is the largest such body. These organizations are part of a growing trend towards multilateralism and play a role in politics which transcend state borders. These organizations can also act as “watchdogs” over state governments.

Question 55

Privatization

Answer 55

Privatization is the transfer of of ownership from the government to the private sector.

Question 56

Protectionism

Answer 56

Protectionism refers to actions or policies that restrict international trade, with the intention of protecting domestic jobs and markets. Such actions and policies may include tariffs on imports, restrictive quotas and subsidies on local production. This can go against practices like dumping.

Question 57

Quality of Life

Answer 57

Quality of life refers to the general well being of individuals. It includes physical and mental health, economic and physical security, education, the environment and culture. Quality of life is a largely subjective measurement.

Question 58

Relative Poverty

Answer 58

Relative poverty is the condition in which individuals do not have the minimum income needed to sustain the average standard of living in their society. Relative poverty is measured in relation to the overall distribution of income in a given country.

Question 59

Remittances

Answer 59

Remittances are transfers of money from individuals outside their home country to someone in the home country. Remittances are one of the largest sources of financial inflows in many developing countries, with migrant workers sending money home to family members.

Question 60

Second World

Answer 60

Second World refers to the former Eastern bloc; former communist-socialist, industrial states. The Soviet Union, China, Cuba and friends.

Question 61

Socialism

Answer 61

Socialism is a political and economic theory that advocates that the means of production, distribution and exchange should be owned or regulated by the community as a whole. In Marxist theory socialism refers to the transitional stage between capitalism and the realization of communism.

Question 62

Socio-Political Development

Answer 62

Socio-political development is the process through which individuals gain knowledge, skills and capacity for political and social action to resist oppression and participate in political systems. Socio-political development expands on concepts of empowerment, social change and activism.

Question 63

Standard of Living

Answer 63

Standard of living refers to the level of wealth, material goods and necessities available to people. Standard of living is a measure of material welfare and is more easily quantified than the related concept of quality of life.

Question 64

Subsidies

Answer 64

Subsidies are transfers of money from the government to an entity. It is a form of financial aid or support given to an economic sector, often with the aim of promoting economic or social policy. Examples of types of subsidies include tax allowances, duty rebates, grants and soft loans.

Question 65

Sustainability

Answer 65

Sustainability implies that current needs should be met without compromising the ability of future generations to meet their needs.

Question 66

Sustainable Development

Answer 66

Sustainable development is development (that is a sustained increase in the well-being of a community), that does not decrease the likelihood of future development. Sustainable development must allow for the continued positive development of future generations.

Question 67

Sustainable Development Goals

Answer 67

In 2016 the MDGs were replaced with the Sustainable Development Goals (SDGs). The set of 17 “Global Goals” have 169 targets between them. It was spearheaded by the United Nations through a deliberative process involving its 193 Member States, as well as global civil society. The SDGs build on the Principles agreed upon under Resolution A/RES/66/288, popularly known as ‘The Future We Want’. It is a non-binding document released as a result of Rio+20 Conference held in 2012 in Rio de Janeiro in Brazil.

1) No poverty
2) No hunger
3) Good health
4) Quality education
5) Gender equality
6) Clean water and sanitation
7) Renewable energy
8) Good jobs and economic growth
9) Innovation and infrastructure
10) Reduced Inequalities
11) Sustainable communities and cities
12) Responsible consumption and production
13) Climate action
14) Life below water
15) Life on land
16) Peace, justice and strong institutions
17) Partnerships for the goals

Question 68

Third World

Answer 68

Third world is commonly used to refer to developing countries in the global south. However, the origin of the term dates to the Cold War and was used to describe the countries not aligned with either NATO or the Communist Bloc.

Question 69

Three Pillar of Sustainability

Answer 69

The three pillars of sustainability are: economic, environmental and social. All three pillars are considered equally important; if any one pillar is weak it will undermine the other two.

Question 70

Tied Aid

Answer 70

Tied aid is foreign aid funds that must be spent in a particular way, dictated by the donor. Sometimes the money must be spent on goods or services from the donor country or in a group of countries selected by the donor.

Question 71

Trade in Services Agreement (TISA)

Answer 71

The Trade in Services Agreement is a proposed international trade agreement to liberalize the trade in services including healthcare, banking and transport. It focuses exclusively on services, rather than goods, and the 23 parties include the European Union and the United States.

The objective of the TISA is to strengthen rules and improve market access for trade in services. More precisely, the agreement being negotiated between the Parties addresses discriminatory barriers to cross-border trade in services, provides a more predictable investment environment for service suppliers, and improves the mobility of services providers. Negotiating Parties are considering proposals related to transparency, domestic regulation, financial services, telecommunications, electronic commerce, movement of natural persons, international maritime services, air transport services, state-owned enterprises, and express delivery services, among others.

Question 72

Trade Liberalization

Answer 72

Trade liberalization is the process of removing or reducing barriers on the free exchange of goods between states. It involves the removal of tariffs, duties, quotas and other requirements. Trade liberalization is strongly encouraged by the OECD.

Question 73

Trans-Pacific Partnership

Answer 73

The TPP is a massive proposed trade agreement between Pacific rim countries. It is being renegotiated after the withdrawal of the United States. The agreement is between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

The Trans-Pacific Partnership (TPP) was the centerpiece of U.S. President Barack Obama’s strategic pivot to Asia. Before President Donald Trump withdrew the United States in 2017, the TPP was set to become the world’s largest free trade deal, covering 40 percent of the global economy.

For its supporters, such a deal would have expanded U.S. trade and investment abroad, spurred economic growth, lowered consumer prices, and created new jobs, while also advancing U.S. strategic interests in the Asia-Pacific region. But its detractors, including Trump, saw the deal as likely to accelerate U.S. decline in manufacturing, lower wages, and increase inequality.

1) The TPP was a massive trade agreement signed by twelve Pacific Rim countries, including the United States, that together comprised 40 percent of the global economy.
2) While many experts say the TPP had economic and strategic benefits, it drew attacks from across the U.S. political spectrum. President Trump withdrew from the deal on his first day in office.
3) The eleven other TPP countries have moved forward with a slightly modified agreement, and have left the door open for the United States to rejoin.

Question 74

Transfer Pricing

Answer 74

→ Transfer pricing accounting occurs when goods or services are exchanged between divisions of the same company.
→ A transfer price is based on market prices in charging another division, subsidiary, or holding company for services rendered.
→ Companies use transfer pricing to reduce the overall tax burden of the parent company.
→ Companies charge a higher price to divisions in high-tax countries (reducing profit) while charging a lower price (increasing profits) for divisions in low-tax countries.
→ The IRS states that transfer pricing should be the same between intercompany transactions as it would have been had the company done the transaction outside the company.

Transfer pricing can be used by multinational corporations to limit the taxes that they pay on primary resources extracted in developing countries by pricing the goods at a lower rate than that determined by the open market.

Question 75

Transparency

Answer 75

Transparency implies openness, communication and accountability.

Question 76

TTIP

Answer 76

The Transatlantic Trade and Investment Partnership (T-TIP) is an ambitious, comprehensive, and high-standard trade and investment agreement being negotiated between the United States and the European Union (EU). T-TIP will help unlock opportunity for American families, workers, businesses, farmers and ranchers through increased access to European markets for Made-in-America goods and services. This will help to promote U.S. international competitiveness, jobs and growth.

Question 77

UN Development Programme (UNDP)

Answer 77

The UNDP is the United Nations global development network and seeks to eradicate poverty and reduce inequalities though sustainable development. The UNDP provides training, advice and grants to countries. The UNDP publishes the Human Development Report to measure and analyze development progress and works to help countries achieve the SDGs.

Question 78

USAID

Answer 78

The United States Agency for International Development (USAID) is the United States government agency primarily responsible for the administration of civilian foreign aid. USAID programs are authorized by the US Congress. Programs through USAID tend to pursue two goals: the reduction of global poverty and the furthering of American interests abroad.

Question 79

Washington Consensus

Answer 79

The Washington Consensus refers to a set of free-market economic policies supported by prominent financial institutions such as the International Monetary Fund, the World Bank, and the U.S. Treasury.

1) Low government borrowing. The idea was to discourage developing economies from having high fiscal deficits relative to their GDP.
2) Diversion of public spending from subsidies to important long-term growth supporting sectors like primary education, primary healthcare, and infrastructure.
3) Implementing tax reform policies to broaden the tax base and adopt moderate marginal tax rates.
4) Selecting interest rates that are determined by the market. These interest rates should be positive after taking inflation into account (real interest rate).
5) Encouraging competitive exchange rates through freely-floating currency exchange.
6) Adoption of free trade policies. This would result in the liberalization of imports, removing trade barriers such as tariffs and quotas.
7) Relaxing rules on foreign direct investment.
8) The privatization of state enterprises. Typically, in developing countries, these industries include railway, oil, and gas.
9) The eradication of regulations and policies that restrict competition or add unnecessary barriers to entry.
10) Development of property rights.

Question 80

World Bank

Answer 80

The World Bank is an international financial institution that provides loans, advice and research to developing countries. It is made up of five institutions and has as its mission to end extreme poverty and promote shared prosperity. The World Bank was born out of the Bretton Woods Conference.

IBRD - The International Bank for Reconstruction and Development
IDA - The International Development Association
IFC - The International Finance Corporation
MIGA - Multilateral Investment Guarantee Agency
ICSID - The International Centre for Settlement of Investment Disputes

Question 81

World Economic Forum

Answer 81

The World Economic Forum is a not-for-profit foundation establish and headquartered in Geneva in 1971. It strives to be impartial and is non-partisan and not untied to any political or national interests. Best known for its annual meeting in Davos (Switzerland), it draws together business leaders, public figures and members of state governments to discuss issues of global concern including globalization, wealth management, and environmental problems.

Question 82

World Trade Organization (WTO)

Answer 82

The WTO is an intergovernmental organization that regulated international trade. Its main function is to ensure that trade occurs as freely smoothly and predictably as possible.

Question 83

Rostow’s Stages of Growth

Answer 83

→ Traditional Society: This stage is characterized by a subsistent, agricultural-based economy with intensive labor and low levels of trading, and a population that does not have a scientific perspective on the world and technology.
→ Preconditions to Take-off: Here, a society begins to develop manufacturing and a more national/international—as opposed to regional—outlook.
→ Take-off: Rostow describes this stage as a short period of intensive growth, in which industrialization begins to occur, and workers and institutions become concentrated around a new industry.
→ Drive to Maturity: This stage takes place over a long period of time, as standards of living rise, the use of technology increases, and the national economy grows and diversifies.
→ Age of High Mass Consumption: At the time of writing, Rostow believed that Western countries, most notably the United States, occupied this last “developed” stage. Here, a country’s economy flourishes in a capitalist system, characterized by mass production and consumerism.