Glossary (J - N) [ 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 ]

J

  • J curve effect - The tendency for a fall in the value of the currency to worsen the balance of trade before it improves the position.

L

  • Labour productivity - The Level of output per unit of labour

  • Land tenure - The system of land ownership

  • Leakages - Income not passed on by consumers in the circular flow e.g. savings, taxation or money spent on imports. Leakages are sometimes called withdrawals.

  • Leasehold land - Land which is owned by the government or a landowner and then leased to a tenant for a fixed period of time

  • Least Developed Countries - The very poorest of the Less Developed Countries

  • Less Developed Countries (LDCs) - Countries who are generally characterised by low levels of GDP and income per head. LDCs usually have a heavy dependence on the primary sector of the economy. In the case of Zambia this is true with dependence on agriculture and copper and cobalt mining.

  • Liberalisation - The opening up of markets to the free market forces of supply and demand

  • Life expectancy - The average length of time that people in a country are expected to live

  • Loan Principal - The sum of money that a country borrows

  • Long run average cost curve - Shows the minimum unit cost of producing each level of output, allowing the size of plant to vary.

  • Lorenz curve - A graph showing the difference between a country's actual income distribution and perfect equality of income distribution

M

  • MDCs - More developed countries

  • Macroeconomic stabilisation - Government policy to stabilise inflation, budget deficits, trade deficits and money supply

  • Marginal Cost - The amount spent on producing one extra unit. The marginal cost is the increase in total cost when one more unit is produced.

  • Marginal Product - The addition to total product following the employment of an extra unit of a variable factor, e.g. labour

  • Marginal Propensity to Consume - The proportion of each extra pound of disposable income spent by households. For example, if a person earns £1 more and consumes 60p of it, then the MPC is 0.6

  • Marginal Propensity to Import - The proportion of each extra pound of income spent on imports. An MPI of 0.4 would mean that 4 Kwacha more was spent on imports when 10 Kwacha extra was earned.

  • Marginal Propensity to Save - The proportion of each extra pound of disposable income not spent by households

  • Marginal Propensity to Tax - The proportion of each extra pound of income taken by the government. An MPT of 0.2 would mean that 2 Kwacha more was taken in tax when 10 Kwacha extra was earned.

  • Market Failure - Market failure occurs when the price mechanism results in an inefficient or grossly unfair allocation of resources.

  • Marshall Lerner condition - States that a devaluation improves the current account balance if the combined price elasticities of demand for exports and imports are greater than 1.

  • Matrilineal - Land and other family assets are passed down the female line of succession

  • Merit goods - A product, such as education, which consumers may undervalue but which the government believes is `good` for consumers. Merit goods would be under-provided in a pure free-market economy. This is because they have external benefits that people would not take into account when they made their decisions about how much to consume. An example is vaccinations. As a result of people being vaccinated we keep disease out of the country, but if it was left just to the market many people might choose to take the risk and not pay for vaccinations. This could have negative effects for society.

  • Monetarists - A group of economists who believe that changes in the money supply are the most effective instrument of government economic policy, and the main determinant of the price level.

  • Multi-Fibre Agreement - A set of bilateral quotas imposed by industrialised countries on the exports of textiles from less developed countries

  • Multinational Enterprise - An international or transnational enterprise which has productive capacity in several countries

  • Multiplier - The multiplier is concerned with how national income changes as a result of a change in an injection, for example investment. The multiplier was a concept developed by Keynes that said that any increase in injections into the economy (investment, government expenditure or exports) would lead to a proportionally bigger increase in National Income. This is because the extra spending would have knock-on effects creating in turn even greater spending. The size of the multiplier would depend on the level of leakages. It can be measured by the formula 1/(1-MPC) where the MPC is the marginal propensity to consume.

N

  • Native Reserve Land - Land which was set aside by the Colonial Administration for use by African farmers

  • Native Trust Land - Land where property rights were extended to European farmers

  • Natural rate of population growth - The growth in population due to changes in the birth and death rates

  • Negative externalities - 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. They are also known as external costs. 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.

  • Neo classical theory - The view that markets operate efficiently and that the way to increase output and employment is to raise aggregate supply.

  • Net Investment - investment over and above that needed to replace worn out capital (depreciation)

  • Net property income from abroad - The difference between incomes earned and incomes paid abroad

  • Niche marketing - A niche market is a specialist area of the market. Niche marketing is therefore selling to that area of the marketing. It demands a very different approach to mass marketing of goods and services.

  • Non Governmental Organisations (NGOs) - Privately owned organisations involved in providing financial and technical assistance to less developed countries