Exam 1 Flashcards
First World
market-oriented
Second World
centralized economies
Third World
rest of the world
Emerging markets
major developing countries where financial
instruments are traded/multinational companies operate
Transition economies -
Move from Communist to Capitalist
LDCs and DCs
Less developed countries and Developed Countries
Sub-Saharan Africa (SSA)
Countries south of the Sahara
East Asia
Japan, North and South Korea, China, Mongolia, and Taiwan. (With or Without China)
Middle East and North Africa (MENA)
Algeria, Bahrain, Djibouti, Egypt, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Libya, Malta, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia, the United Arab Emirates, Palestine, and Yemen.
South Asia
Bangladesh, Bhutan, India, Pakistan, Nepal, Sri Lanka, and Maldives
Central Asia
Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan
OECD
Organization of Economic Cooperation and Development, DCs
G7
7 Most advanced developed economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States
G8
G7+ Russia
G8+5
G8+ Brazil, India, China, South Africa, and Mexico
Oil Producing Countries
Oil Producing Arab States+ OPEC countries
Large Countries
India and China
Island Economies
Madagascar
Transition Economies Examples
Vietnam, Poland, and Cuba
NICS
Newly Industrialized Countries
Gang of Four (Four Asian Tigers)
South Korea, Taiwan, Hong Kong, and Singapore
Tiger Clubs: follow tigers soon
Phillippines, Malaysia, Vietnam, Indonesia, and Thailand
BRICs
Brazil, Russia, India, and China
BRICS
Brazil, Russia, India, China, and South Africa
MINT
Mexico, Indonesia, Nigeria, and Turkey
Next 11
Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan,
Philippines, South Korea, Turkey, Vietnam
Define Growth
sustained growth in per capita income
Development
no formal definition, more of a process with multiple features
High Growth but not much development
Gulf Oil Producing States (e.g. Libya, Qatar)
High Development but not much Growth
Sri Lanka, Cuba
Market Failure
the economic situation defined by an inefficient distribution of goods and services in the free market
Government Failures
arises when government has created inefficiencies because it should not have intervened in the first place or when it could have solved a given problem or set of problems more efficiently, that is, by generating greater net benefits.
Reasons for market failure
Information, Monopolies, Externalities, and Public goods
First World
Market Based Economies
Second World
Command Based: USSR
Third World
Everybody else in the world
The World Bank
Determines the GDP per capita in order to become a DC/LDC
DC: 12,535 and above
DC 12,534 and below
Economic Development
No real definition of Development
GDP
Gross Domestic Product
The production of Everything within the nations borders
GNP
Gross National Product Includes the production of all citizens of that country whether they live in it or not
GNI
Gross National Income
a measurement of a country’s income. It
measures all the income earned by a country’s residents and businesses,
including those earned abroad that flow back into the country
Used and preferred by the world banks
Doubling Time
number of years it takes for income to double in a
country (Rule of 70)
Doubling Time Formula
70/g
g=growth rate
PPP
purchasing power parity; more effective than ER because it
takes into account non-traded goods and can be used to compare
their value however it does not do a good job in comparing QUALITY
LDCs GNI rises with the ___ Computation
PPP
Non-traded goods
ttempts to supply non-tradable goods or
services from a distance is either impossible or results in a significant
loss of utility
Example: Haircuts
Historical Growth
No growth up until about 1820
Leaders in growth from 1580-1820
Netherlands
Leaders in Growth from 1820-1890
UK
Leaders in growth from 1890-present
USA
The Great Divergence
shift in which the Western world (i.e. Western Europe and the parts of the New World where its people became the dominant populations) overcame pre-modern growth constraints and emerged during the 19th century as the most powerful and wealthy world
Western Offshoots
U.S., Canada, Aus- tralia, and Nea Zealand
GNI indicates ______
Growth
HDI indicates ___________
Development
HDI:
Health
Life expectancy (years)
HDI:
Education
Expected Years of schooling and Mean years of schooling
HDI:
Quality of Life
ln(GNI@ppp) captures diminishing marginal utility
Dimension Index formula
DI=Actual Value-Minimum Value/
Maximum value-minimum Value
MDGs
Millennium Development Goals
MDGs purpose
More realistic (met most goals)
- More focused (less goals set
SDGs
Sustainable Development Goals
SDGs Purpose
Less equitable (unreasonable expectations for LDCs)
- Less involvement (countries have less say in goals set)
- Less obvious goals (poor measurement standards)
If Brazil’s growth rate is 5% and GNI per capita (PPP) is $5,750,
what will Brazil’s GNI @ PPP be in 5 years (2020)?
A. $7560
B. $8550
C. $6450
D. 7340 (Correct)
China wants to double its per capita GDP in 10 years.
What should its per capita income growth be?
Formula
70/g = number of years
70/g = 10
G = 7
New Zealand has a mean years of schooling of 11.4 and an expected years of
schooling of 13.7. Calculate New Zealand’s education index. (Remember that
the goal posts for the mean is [0:15], and the expected years is [0:18]
Find mean years ratio: 11.4/15 = 0.76
Find expected year ratio: 13.7/18 = 0.761
Education index = (Expected + Mean)/2
= (0.76 + 0.761)/2
Education index = 0.76
