Glossary (D - E) [ Biz/ed Virtual Developing Country ]


[ 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 ]


  • Death rate - The number of deaths per thousand of the population in a year

  • Debt for equity swap - A mechanism where indebted LDCs swap shares in domestic firms for private foreign debt

  • Debt for nature swap - A mechanism where foreign debt is exchanged for domestic debt enabling resources to be released to finance environmental conservation

  • Debt service - The total amount of interest payments and repayments of principal on external public debt

  • Debt service ratio - The ratio of interest and principle payments as a proportion of exports for a given year

  • Debt servicing - The repayment of interest and principle to external creditors

  • Debtor nation - A country with a balance of payments deficit

  • Deflationary policy - Policies designed to reduce aggregate demand

  • Deforestation - The clearing of forested land

  • Demand - Demand is the want or need or desire for a product that is backed by an ability to pay. Demand is measured over a given time period. It is determined by a number of factors including income, tastes and the price of complementary and substitute goods.

  • Demand pull inflation - Occurs when aggregate demand exceeds aggregate supply. If there is an excess level of demand in the economy, this will tend to cause prices to rise. This type of inflation is called demand-pull inflation and is argued by Keynesians to be one of the main causes of inflation. Demand-pull inflation is essentially "too much money chasing too few goods."

  • Demerit goods - A product, such as alcohol, which consumers may overvalue but which the government believes may be harmful for consumers.

  • Demographic transition - Changes in population growth rates over time due to changes in birth and death rates

  • Dependency ratio - The ratio of dependent population (the young and the elderly) to the working age population

  • Deregulation - The removal of controls on a particular market aimed at improving the economic efficiency of that market and therefore the performance of the economy at the microeconomic level. Deregulation is generally considered a supply side policy. An example would be the abandonment of a licensing system for taxis.

  • Devaluation - Occurs when the government lowers the value of the exchange rate from one fixed rate to another

  • Development - The process of improving the quality of all people lives within a country

  • Development trap - The vicious cycles of poverty that prevent a country from developing

  • Diminishing Returns - When the addition of a variable factor of production results in a fall in marginal product. Diminishing returns refers to a situation where a firm is trying to expand by using more of its variable factors, but finds that the extra output they get each time they add one gets progressively less and less. This usually arises because their capacity is limited in the short-run and the combination of the fixed and variable factors becomes less than optimal. Diminishing returns is the main reason why the short-run aggregate supply curve is upward sloping.

  • Disbursement - The transfer of financial resources and or good and services from a donor to a recipient country

  • Diversification - A firm increasing the range of products it produces

  • Dual exchange rate - A system where there is a fixed official exchange rate and an illegal market determined parallel exchange rate

  • Dumping - The sale of goods in a foreign country at a price below that charged in the home market.


  • Economic Growth - Typically refers to an increase in a country's output of goods and services. It is usually measured by changes in real GDP.

  • Economies of scale - A reduction in long run unit costs which arise from an increase in production. Economies of scale occur when larger firms are able to lower their unit costs. This may happen for a variety of reasons. A larger firm may be able to buy in bulk, it may be able to organise production more efficiently, it may be able to raise capital cheaper and more efficiently. All of these represent economies of scale.

  • European Investment Bank - The European Investment Bank is the largest financial institution in the world. It gives loans for regional development particularly in the less developed areas of Europe.

  • European Regional Development Fund (ERDF) - The ERDF provides finance for projects in the poorest regions of Europe. The intention is to try to reduce the inequalities between regions in Europe.

  • Exchange control - A government policy where the amount of foreign currency available to domestic firms and citizens is controlled

  • Exchange rate - The price of one currency in terms of another currency. For example, the exchange rate between the £ and the $ may be £1=$1.65. This means that you need to pay a price of £1 to get every $1.65. Exchange rates can be fixed or floating. Fixed means that they stay at the same value as set by the government. Floating means that they fluctuate day to day according to the market. More generally the term can also refer to the price at which any good is being traded for another good.

  • Exchange rate mechanism - An adjustable peg system which involved EU countries maintaining the value of their currencies within limited margins but being allowed to float their currencies against non member currencies. The ERM was the forerunner to the implementation of the Euro.

  • Export promotion - The government attempts to stimulate exports by giving incentives to exporting firms

  • Exports - Goods, services and capital assets sold abroad. The sale of exports results in the earning of foreign exchange for the country and credits on the balance of payments accounts.

  • External benefits - These are also known as positive externalities. They are impacts on `outsiders` that are advantageous to them and for which they do not have to pay. Externalities occur where the actions of firms and individuals have an effect on people other than themselves. In the case of positive externalities the external effects are benefits on other people. There may be external benefits from both production and consumption. If these are added to the private benefits we get the total social benefits. An example of positive externalities would be the side effects of production processes.

  • External costs - They are also known as negative externalities. They are impacts on `outsiders` that are disadvantageous to them and for which they receive no compensation. The externalities are occurring where the actions of firms and individuals have an effect on people other than themselves. In the case of negative externalities the external effects are costs on other people. There may be external costs from both production and consumption. If these are added to the private costs we get the total social costs. An example of negative externalities would be the side effects of production processes e.g. the pollution (noise, dust, vibration) endured by people living next to a quarry.

  • External debt - the total amount of private and public foreign debt owed by a country

  • Externalities - The spillover effects of production or consumption for which no payment is made. Externalities can be positive or negative. For example all fax users gain as new users become connected (positive); and smoke from factory chimneys (negative).