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| "substantial freedoms", such as the ability to live to old age, engage in economic transactions, or participate in political activities); these are construed in terms of the substantive freedoms people have reason to value, instead of utility (happiness, desire-fulfilment or choice) or access to resources (income, commodities, assets). -Amartya Sen |
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| theory uses the long-term equilibrium exchange rate of two currencies to equalize their purchasing power. Developed by Gustav Cassel in 1920, it is based on the law of one price: the idea that, in an efficient market, identical goods must have only one price. |
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Developed by Amartya Sen; The HDI measures the average achievements in a country in three basic dimensions of human development: - A long and healthy life, as measured by life expectancy at birth.
- Knowledge and education, as measured by the adult literacy rate (with two-thirds weighting) and the combined primary, secondary, and tertiary gross enrollment ratio (with one-third weighting).
- A decent standard of living, as measured by the log of gross domestic product (GDP) per capita at purchasing power parity (PPP) in USD.
it is the measure of life expectancy, literacy, education, and standard of living for countries worldwide. It is a standard means of measuring well-being, especially child welfare. It is used to determine and indicate whether a country is a developed, developing, or underdeveloped country and also to measure the impact of economic policies on quality of life. |
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an approach to social analysis and social change developed principally by Andre Gunder Frank & Immanuel Wallerstein. "A system is defined as a unit with single division of labour and multiple cultural systems."-Wallerstein |
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| a country's factor endowment is commonly understood as the amount of land, labor, capital, and entrepreneurship that a country possesses and can exploit for manufacturing. |
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Marx: capital accumulation refers to the chrematistic operation whereby a sum of money is transformed into a larger sum of money (capitalism is this money-making activity, although Marx often equates capitalism with the capitalist mode of production). Here, capital is defined essentially as economic or commercial asset value in search of additional value or surplus-value. This requires property relations which enable objects of value to be appropriated and owned. Frank/World System: argues that previous world-systems were what Amin calls "tributary" or Wallerstein "world empires." In these, Amin claims that politics and ideology were in command, not the economic law of value in the accumulation of capital. Wallerstein seems to agree. |
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is a measure of statistical dispersion most prominently used as a measure of inequality of income distribution or inequality of wealth distribution. It is defined as a ratio with values between 0 and 1: the numerator is the area between the Lorenz curve of the distribution and the uniform distribution line; the denominator is the area under the uniform distribution line. Thus, a low Gini coefficient indicates more equal income or wealth distribution, while a high Gini coefficient indicates more unequal distribution. 0 corresponds to perfect equality (everyone having exactly the same income) and 1 corresponds to perfect inequality (where one person has all the income, while everyone else has zero income). The Gini coefficient requires that no one have a negative net income or wealth. The Gini index is the Gini coefficient expressed as a percentage, and is equal to the Gini coefficient multiplied by 100. |
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the graphical representation of Simon Kuznets's theory ('Kuznets hypothesis') that economic inequality increases over time, then after a critical income is attained, inequality begins to decrease. [image] [image] |
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| Development of Underdevelopment |
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| Andre Gunder Frank - Colonial and post-colonial ties between the core and periphery remain in tact (though transformed from industrial to financial capital flows) in the world system. These ties keep the periphery underdeveloped. Also, the core was never "underdeveloped", therefore the periphery is not merely in a "stage" of underdevelopment compared to the core. |
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The ratio of the combined child population (0-14 years) and the aged population (65 years and over) - persons in the "dependent" ages - to every 100 people of the intermediate age population (15-65 years) - "economically active" ages.
Where more detailed data are lacking, the age-dependency ratio is often used as an indicator of the economic burden the productive portion of a population must carry - even though some persons defined as "dependent" are producers and some persons in the "productive" ages are economically dependent. |
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| Total Fertility Rate (TFR) |
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| sometimes also called the fertility rate, period total fertility rate (PTFR) or total period fertility rate (TPFR)) of a population is the average number of children that would be born to a woman over her lifetime if she were to experience the exact current age-specific fertility rates (ASFRs) through her lifetime. It is obtained by summing the age-specific rates for a given time-point. |
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| occurs in societies that transition from high birth rates and high death rates to low birth rates and low death rates as part of the economic development of a country from a pre-industrial to an industrialized economy. |
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| famine occurs not only from a lack of food, but from inequalities built into mechanisms for distributing food. Sen points to a number of social and economic factors, such as declining wages, unemployment, rising food prices, and poor food-distribution systems. These issues led to starvation among certain groups in society. His capabilities approach focuses on positive freedom, a person's actual ability to be or do something, rather than on negative freedom approaches, which are common in economics and simply focuses on non-interference. |
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| Total Fertility Rate (TFR) |
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| TFR of a population is the average number of children that would be born to a woman over her lifetime if she were to experience the exact current age-specific fertility rates (ASFRs) through her lifetime. It is obtained by summing the age-specific rates for a given time-point. |
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| a type of social trap, often economic, that involves a conflict over finite resources between individual interests and the common good. |
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the number deaths of infants one year of age or younger per 1000 live births. (as compared to Child Mortality Rate which is 5 years or younger.) |
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| Opportunity Costs of Women's Time |
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| As development occurs, the life-choices for women tend to expand and remove them from the limited roles offerred in the past. These choices tend extend the time before first pregancy as well as lower the fertility rate. |
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| Environmental Kuznet's Curve |
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| a systematic relationship between income changes and environmental quality |
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| Marx: labour performed in excess of the labour necessary to produce the means of livelihood of the worker ("necessary labour"). According to Marxian economics, surplus labour is usually "unpaid labour". Marxian economics regards surplus labour as the ultimate source of capitalist profits. |
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| The "rational peasant" will be resistant to new or perceived risky investments in future production if there is not guranteed benefit. This tends to stifle development of production in these cases. |
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Example of A.I.: When faced with external pressure from the economic demands of the Dutch colonial regime and internal pressure from rapidly increasing population, intensified existing forms of agriculture rather than changing. This involved putting even more labour into paddy field cultivation, increasing per hectare output while maintaining per capita output. |
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| Migrant workers who only temporarily stay in the destination area to earn wages before returning to their area of origin. |
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| transfers of money by foreign workers to their home countries. |
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| Import Substituting Industrialization (ISI) |
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| a trade and economic policy based on the premise that a country should attempt to substitute products which it imports (mostly finished goods) with locally produced substitutes. |
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| Foreign Direct Investment (FDI) |
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| "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor."[1] The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate. The UN defines control in this case as owning 10% or more of the ordinary shares or voting power of an incorporated firm or its equivalent for an unincorporated firm; lower ownership shares are known as portfolio investment. |
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| a phrase initially coined in 1989 by John Williamson to describe a relatively specific set of ten economic policy prescriptions that he considered to constitute a "standard" reform package promoted for crisis-wracked countries by Washington-based institutions such as the International Monetary Fund, World Bank and U.S. Treasury Department.[1] |
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| Mexico's inward-looking development strategy produced sustained economic growth of 3 to 4 percent and modest 3 percent inflation annually from the 1940s until the 1970s. Mexico's strong economic performance continued into the 1960s, when GDP growth averaged about 7 percent overall and about 3 percent per capita. Consumer price inflation averaged only 3 percent annually. Manufacturing remained the country's dominant growth sector, expanding 7 percent annually and attracting considerable foreign investment. Mining grew at an annual rate of nearly 4 percent, trade at 6 percent, and agriculture at 3 percent. By 1970 Mexico had diversified its export base and become largely self-sufficient in food crops, steel, and most consumer goods. Although its imports remained high, most were capital goods used to expand domestic production. |
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| an economic reason for protectionism. The crux of the argument is that nascent industries often do not have the economies of scale that their older competitors from other countries may have, and thus need to be protected until they can attain similar economies of scale. |
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| occurs when assets and/or money rapidly flow out of a country, due to an economic event that disturbs investors and causes them to lower their valuation of the assets in that country, or otherwise to lose confidence in its economic strength. This leads to a disappearance of wealth and is usually accompanied by a sharp drop in the exchange rate of the affected country (depreciation in a variable exchange rate regime, or a forced devaluation in a fixed exchange rate regime). |
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| a condition attached to a loan or to debt relief, typically by the International Monetary Fund, World Bank or in the case of bilateral aid, the donor country. Conditionalities may involve relatively uncontroversial requirements to enhance aid effectiveness, such as anti-corruption measures, but they may involve highly controversial ones, such as austerity or the privatization of key public services, which may provoke strong political opposition in the recipient country. These conditionalities are often grouped under the label structural adjustment as they were prominent in the structural adjustment programs following the debt crisis of the 1980s. |
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| Increasing Returns to Scale |
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| technical property of production that examines changes in output subsequent to a proportional change in all inputs (where all inputs increase by a constant). If output increases by that same proportional change then there are constant returns to scale (CRTS), sometimes referred to simply as returns to scale. If output increases by less than that proportional change, there are decreasing returns to scale (DRS). If output increases by more than that proportion, there are increasing returns to scale (IRS)... Short example: Where all inputs increase by a factor of 2, new values for output should be: Twice the previous output given a constant return to scale (CRTS) Less than twice the previous output given a decreased return to scale (DRS) More than twice previous output given an increased return to scale (IRS) |
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| an international organization designed to supervise and liberalize international trade. The World Trade Organization deals with the rules of trade between nations at a near-global level; it is responsible for negotiating and implementing new trade agreements, and is in charge of policing member countries' adherence to all the WTO agreements, signed by the bulk of the world's trading nations and ratified in their parliaments.[ |
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| Passive holdings of securities such as foreign stocks, bonds, or other financial assets, none of which entails active management or control of the securities' issuer by the investor; where such control exists, it is known as foreign direct investment. http://www.portfolioinvestment.com/ Portfolio Investment Co. PIC Portfolio investment is strictly connected with a portfolio diversification process. Some examples of Portfolio investment are: - purchase of shares in a foreign company.
- purchase of bonds issued by a foreign government.
- acquisition of assets in a foreign country.
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