glossary (disregard the wh? on the answers)

Question 1

A situation where one party has more information than another party in a transaction.

Answer 1

What is asymmetric information?

Question 2

The legacy of colonialism and the unequal power dynamics between core and periphery.

Answer 2

What does the neocolonial dependence model emphasize?

Question 3

A situation where developed countries have much greater power than less developed countries in international economic decisions.

Answer 3

What is dominance in international affairs?

Question 4

A concerted, economy-wide effort to initiate or accelerate economic development across various industries.

Answer 4

What is a big push?

Question 5

A state where agents’ inability to coordinate leads to an outcome that leaves all agents worse off.

Answer 5

What is coordination failure?

Question 6

What do contemporary theories of development highlight?

Answer 6

The complexities of achieving development, including coordination problems and imperfect information.

Question 7

Posits that for a complex production process to yield high-value output, every task must be performed proficiently.

Answer 7

What is the O-ring model?

Question 8

What are the components of economic growth?

Answer 8

• Capital accumulation,
• population growth, and
• technological progress.

Question 9

It highlights the pitfalls of using foreign advisors who misapply developed-country models.

Answer 9

What is the false-paradigm model?

Question 10

An index measuring national socioeconomic development based on life expectancy at birth, educational attainment, literacy, and adjusted real per capita income.

Answer 10

What is the Human Development Index (HDI)?

Question 11

The number of children born alive each year per 1,000 population.

Answer 11

What is the crude birth rate?

A crude birthrate of 20 per 1,000

Question 12

When one agent’s action incentivizes others to take similar actions.

Answer 12

What is the copycat effect in economics?

Question 13

A bad equilibrium involving a vicious cycle of poverty and underdevelopment.

Answer 13

What is a poverty trap?

Question 14

The increase in total output resulting from the use of one additional unit of a variable factor of production.

Answer 14

What is the marginal product?

Question 15

When the actions of one party create a cost or benefit for a third party not involved in the original transaction.

Answer 15

What is an information externality?

Question 16

A positive or negative spillover effect on an agent’s costs or revenues.

Answer 16

What are pecuniary externalities?

Question 17

A situation where a country struggles to develop further after reaching middle-income status.

Answer 17

What is the middle-income trap?

Question 18

Switch from agriculture to industry, rural-urban migration, accumulation of capital, and changes in population growth.

Answer 18

What are some empirical patterns of development?

Question 19

The number of units of capital per unit of labor, where lower ratios in LDCs should mean higher returns to new investment.

Answer 19

What is the capital-labor ratio?

Question 20

An economy with no foreign trade transactions or economic contacts with the rest of the world.

Answer 20

What is a closed economy?

Question 21

Costs of monitoring managers and ensuring compliance with employer wishes.

Answer 21

What are agency costs?

Question 22

Includes raising total demand, reducing fixed costs for later entrants, and shifting demand toward manufacturing goods.

Answer 22

What are the mechanisms of a big push?

Question 23

Local elites who act as fronts for foreign investors in dependence theory.

Answer 23

What are comprador groups?

Question 24

What does ‘center’ refer to in dependence theory?

Answer 24

The economically developed world.

Question 25

It posits that superior and inferior elements can coexist within an economy.

Answer 25

What does the dualistic-development thesis suggest?

Question 26

An increase in an economy's output, primarily driven by capital accumulation, population growth, and productivity improvements.

Answer 26

What is economic growth?

Question 27

As a person consumes more of a good or service, the additional satisfaction (utility) derived from each extra unit decreases.

Answer 27

What is diminishing marginal utility?

Question 28

A government policy that can move the economy to a preferred equilibrium, potentially leading to self-sustaining growth.

Answer 28

What is deep intervention?

Question 29

The emigration of highly educated and skilled professional and technical manpower from developing to developed countries.

Answer 29

What is brain drain?

Question 30

It emphasizes the importance of identifying true costs and potential products for specialization through industrial policy.

Answer 30

What is the Hausmann-Rodrik theory of economic development?

Question 31

The coexistence of two mutually exclusive situations in one place, such as extreme poverty and affluence.

Answer 31

What is dualism?

Question 32

The proportion of the total population aged 0 to 15 and 65+, considered economically unproductive and not counted in the labor force.

Answer 32

What is the dependency burden?

Question 33

Describes a production process where the output's value hinges on the successful completion of all tasks.

Answer 33

What is the O-ring production function?

Question 34

The total amount of physical goods existing at a particular time that have been produced for use in the production of other goods (including services).

Answer 34

What is capital stock?

Question 35

Both governments and markets can fail, necessitating a balanced approach to development.

Answer 35

What is the key insight of classic theories of development?

Question 36

The broader benefits that an investment generates for society as a whole.

Answer 36

What are social returns?

Question 37

A phenomenon resulting from market imperfections that weaken the functioning of a free-market economy.

Answer 37

What is market failure?

Question 38

A theory of development where surplus labor from the traditional agricultural sector is transferred to the modern industrial sector.

Answer 38

What is the Lewis two-sector model?

Question 39

It challenges state intervention, highlights government failures, and argues that capital accumulation alone cannot sustain growth.

Answer 39

What are the main arguments of the Neoclassical Counterrevolution?

Question 40

The total final output of goods and services produced by a country's economy within its territory, regardless of allocation between domestic and foreign claims.

Answer 40

What is gross domestic product (GDP)?

Question 41

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

Answer 41

What is the capital-output ratio?

Question 42

When an action taken by one agent increases the incentives for others to take similar actions.

Answer 42

What is complementarity?

Question 43

When one agent's action decreases incentives for others to take similar actions.

Answer 43

What is congestion in economic terms?

Question 44

A positive or negative spillover effect on a firm’s production function through means other than market exchange.

Answer 44

What is a technological externality?

Question 45

Considered a key driver, it includes neutral, augmenting, and saving technology, often leading to labor-replacing innovations.

Answer 45

What is technological change in the context of economic growth?

Question 46

A framework for identifying binding constraints that hinder a country's economic growth.

Answer 46

What is growth diagnostics?

Question 47

Identifying a country's most binding constraints on economic growth, emphasizing that there is no one-size-fits-all solution.

Answer 47

What does the Hausmann-Rodrik-Velasco Growth Diagnostics Framework focus on?

Question 48

A closed economy that attempts to be completely self-reliant.

Answer 48

What is autarky?

Question 49

A theoretical model of an economy using price systems and market mechanisms.

Answer 49

What is free-market analysis?

Question 50

A situation where all parties would benefit from cooperation but lack information on how to do so.

Answer 50

What is the where-to-meet dilemma?

Question 51

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

Answer 51

What is the Harrod-Domar growth model?

Question 52

The total monetary value of all final goods and services produced in an economy over a period of time, usually a year.

Answer 52

What is gross national income (GNI)?

Question 53

A situation where a population can only meet its bare subsistence essentials of food, clothing, and shelter to maintain minimum levels of living.

Answer 53

what is absolute poverty?

Question 54

An action taken by one agent that decreases the incentives for others to take similar actions.

Answer 54

What is congestion?

Question 55

Includes necessary versus sufficient conditions, exclusion of labor, and the focus on savings and investment as major contributors to economic output.

Answer 55

What are criticisms of the stages model?

Question 56

The idea that economies with lower per capita incomes tend to grow faster than those with higher per capita incomes, potentially narrowing the income gap between countries over time.

Answer 56

What does convergence refer to in economics?

Question 57

The degree to which a society is divided into distinct groups (e.g., ethnic, religious, linguistic), often studied in relation to its impact on economic growth.

Answer 57

What is fractionalization?

Question 58

A poverty trap at a regional or national level where underdevelopment perpetuates itself over time.

Answer 58

What is an underdevelopment trap?

Question 59

The interdependence and relationships between different industries or sectors.

Answer 59

What is linkage in economics?

Question 60

An increase in an economy's output, primarily driven by capital accumulation, population growth, and technological change.

Answer 60

What is economic growth defined as?

Question 61

A condition where more than one equilibrium exists, which may be ranked but the market does not move to the preferred outcome.

Answer 61

What are multiple equilibria?

Question 62

The structures and rules within a society that govern economic activities, influencing resource allocation, production, and exchange.

Answer 62

What are economic institutions?

Question 63

It occurs when agents fail to coordinate actions, leading to worse outcomes for all.

Answer 63

What is underdevelopment as a coordination failure?

Question 64

A situation where all parties would be better off cooperating but have an incentive to cheat.

Answer 64

What is the prisoners’ dilemma?

Question 65

A situation where LDCs rely on developed country policies to stimulate their own economic growth.

Answer 65

What does dependence mean in economic terms?

Question 66

The process or state where two or more things move apart or become increasingly different, such as income inequality between countries.

Answer 66

What does divergence refer to?

Question 67

An economic system where prices of goods and services are determined by supply and demand with minimal government intervention.

Answer 67

What is a free market?

Question 68

It increases the labor force and expands the domestic market, though the effects can be ambiguous in developing countries.

Answer 68

What are the benefits of population growth for economic growth?

Question 69

A situation where one or more persons may be made better off without making anyone worse off.

Answer 69

What is a Pareto improvement?

Question 70

Total output divided by total factor input, such as total output divided by the total amount of labor used to produce that output.

Answer 70

What is the average product?

Question 71

The decline over time in the value or price of one currency in terms of another as a result of market forces of supply and demand. ## Footnote See devaluation and exchange rate.

Answer 71

What is depreciation of the capital stock?

Question 72

The proposition that developing countries have failed to develop due to incorrect development strategies based on an overstressed capital accumulation model.

Answer 72

What is the false-paradigm model?

Question 73

Trade in which goods can be imported and exported without barriers like tariffs or quotas, encouraging specialization and increasing production efficiencies.

Answer 73

What is free trade?

Question 74

Productive investments embodied in human persons, including skills, abilities, ideals, and health resulting from education and training.

Answer 74

What is human capital?

Question 75

The accumulation of physical, economic, and human capital, requiring saving to expand future output.

Answer 75

What is capital accumulation?

Question 76

Any individual, household, business, organization, or government that engages in economic activities.

Answer 76

What is an economic agent?