primary product dependence Flashcards
- Primary Product
A product made from raw materials.
- Price Instability
Small changes in the supply and demand for primary products can lead to big changes in price.
- Buffer Stock Scheme
A scheme where the government buys and sells primary products from a market in order to reduce price fluctuations.
- Prebisch-Singer Hypothesis
As world incomes rise, countries who depend on exporting primary products will see a deterioration in their terms of trade.
- Lewis Model
As countries industrialise, manufacturing firms will make more profit and increase investment. This will increase their demand for labour which will increase wages and attract even more workers into the manufacturing sector.
- Industrialisation
Where the main industry in a country shifts from agriculture to manufacturing.
what is a foreign currency gap
- more foreign currency flowing out of the country than in due to a trade defecit
why is a foreign currency gap bad
eg lebanon needs to now sell its own currency to get the foreign currency. Leads to a depreciation of the lebanon pound leading to cost push inflation, decrease in output, lower economic growth
what is capital fight
Capital flight is the uncertain and rapid movement of large sums of money out of a country.