Development Glossary (A - C) [ Biz/ed Virtual Developing Country ]


Glossary

[ A B C D E F G H I J K L M N O P Q R S T U V W X Y Z ]

A

  • AIDS - Autoimmune Deficiency Syndrome

  • Absolute Poverty - A level of poverty when only the minimum levels of food, clothing and shelter can be met.

  • Absolute advantage - Exists when a country can produce more of a product per resource unit than another country. It is a basis for trade. A country with an absolute advantage is producing more efficiently than another.

  • Accelerator theory - The principle states that a given change in demand for consumer goods will cause a greater percentage change in demand for capital goods. The principle is used to help explain business cycles. The accelerator theory suggests that the level of net investment will be determined by the rate of change of national income. If national income is growing at an increasing rate then net investment will also grow, but when the rate of growth slows net investment will fall. There will then be an interaction between the multiplier and the accelerator that may cause larger fluctuations in the trade cycle.

  • African Development Bank - A regional bank started in 1966 to support the development of Independent African states through loans and assistance

  • Aggregate demand - The total of all planned expenditure in an economy at each level of prices. Aggregate demand is the total level of demand in the economy. It is the total of all desired expenditure at any time by all groups in the economy. The main groups who spend are consumers (consumption), firms (who spend on investment), government (government expenditure) and overseas (exports). Total aggregate demand is therefore:

    AD = C + I + G + (X-M)

    where C = consumption expenditure, I = investment expenditure, G = government expenditure and (X - M) = net exports (exports - imports)

  • Aggregate supply - Aggregate supply is the total of all planned production at each level of prices. Aggregate supply is the total quantity supplied at every price level. It is the total of all goods and services produced in an economy in a given time period. There is some dispute between Keynesians and Monetarists about what determines the level of aggregate supply. Keynesians argued that supply was determined by the level of aggregate demand, while classical (economists followed Say's Law which argued that aggregate supply was determined by supply-side factors.

  • Agricultural sector - The part of the economy comprised of farming, fishing, forestry, hunting

  • Allocative efficiency - Allocative efficiency refers to the efficiency with which markets are allocating resources. A market will be allocatively efficient if it is producing the right goods for the right people at the right price. An allocatively efficient market is therefore one which has no imperfections. This will be true when marginal cost is equal to average revenue in the market. It occurs where a firm produces at MC = AR (marginal cost pricing).

  • Amortization - The paying off of a loan principal

  • Appropriate technology - A technology that complements the factor endowments of the country.

B

  • Balance of payments - A record of the income and expenditure transactions between UK residents and persons abroad. The balance of payments accounts record all flows of money in and out of the UK. These flows might result from the sale of exports (an inflow or credit) or from the UK purchasing imports from overseas (an outflow or debit). They might also arise from other countries investing in the UK (inward investment - a credit), or from UK companies investing abroad (a debit). All flows of money are added together and grouped according to their type. The overall account is then called the balance of payments - principally because the total of outflows must be equivalent to the total of inflows. The balance of payments therefore balances!!

  • Balance of trade - The difference between the value of visible exports and visible imports.

  • Barter - The direct exchange of goods and services without the use of money.

  • Bilateral aid - Official development assistance that takes place between a donor country and a recipient country

  • Biodiversity - A variety of life forms that exist within an ecosystem

  • Black market - Created when buyers and sellers meet to negotiate the exchange of a prohibited or illegal good. More generally any unofficial market in which prices are inordinately high.

  • Budget deficit - A situation where government expenditure exceeds government income. Government income comes from taxation and other revenue and where this is less than the money the government is spending on defence, education, health, welfare and so on, this is called a budget deficit.

  • Buffer stock scheme - A buffer stock scheme is a form of intervention to try to stabilise the price of a commodity. Stocks of the commodity are kept and sold when the price is high to try to reduce it. When the price is low further stocks of the commodity are bought.

C

  • Capital - Man made resources e.g. machines, factories, offices. Capital is one of the factors of production.

  • Capital Output Ratio - The ratio that shows the amount of units of capital that are needed to produce a certain level of output

  • Capital account - That part of the balance of payments accounts that measures the flows of capital in and out of the country

  • Capital flight - The movement of financial assets out of a country in response to an unfavourable domestic circumstances.

  • Cartel - A group of producers who act together to fix price, output or conditions of sale

  • Cash Crops - Crops that are produced only for the market

  • Chitemene - A form of slash and burn shifting cultivation

  • Circular Flow of Income - The flow of income and payments between economic agents in an economy. The key agents are households and firms and the circular flow shows how money moves between them. There may also be leakages from the circular flow and injections into it.

  • Colonisation - The process of a country being taken over and becoming a colony of another

  • Command or planned economy - An economic system where the State owns and then allocates resources through some form of planning process

  • Commercial bank - A commercial organisation that provides a variety of banking services such as loans and savings schemes

  • Common External Tariff - The common tariff that members of a customs union, common market or economic union impose on non members

  • Common market - A customs union which permits the free movement of capital and labour between member states

  • Comparative advantage - This exists when a country produces a good or service at a lower opportunity cost than its trading partners

  • Concessional terms - A loan that is made at more favourable terms that could be obtained commercially

  • Consumer surplus - This occurs when people are able to buy a good for less than they would be willing to pay. They enjoy more utility than they had to pay for

  • Consumption - Expenditure by households on goods and services which satisfy current wants. It is a key component of aggregate demand.

  • Cost benefit analysis - A method of assessing investment projects which takes into account social costs and benefits

  • Cost push inflation - When a cost of production (e.g. wages) increases and firms put up prices to maintain profits. Cost increases may happen because wages have gone up or because raw material prices have increased. It is important not to muddle cost-push with demand-pull inflation. Cost-push inflation happens when costs have risen independently of demand.

  • Creditor nation - Those nations that have a balance of payments surplus

  • Crude birth rate - The number of children born alive each year per 1000 of the population

  • Crude death rate - the yearly number of deaths per 1000 of the population

  • Current account - Usually taken to mean the current account of the balance of payments. The current account measures flows of visible and invisible trade, that is trade in goods and services.

  • Current account balance - A record of a country's earnings from the sale of visible and invisible items minus its expenditure on visible and invisible items from abroad.

  • Current account deficit - When a country spends more on visible and invisible items from abroad than it earns from the sale of visible and invisible items.

  • Customary Law - A land tenure arrangement where there is communal ownership of land.

  • Customs union - A group of countries which removes tariff barriers between member countries and also imposes common external tariffs on non-members