Glossary (O - R) [ 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 ]


  • OPEC - Organisation of Petroleum Exporting Countries

  • Official Development Assistance (ODA) - Disbursements of loans and grants at concessionary rates by governments

  • Official Exchange Rate - The rate at which the Central Bank will exchange the local currency for foreign currency

  • Opportunity Cost - The decision to produce or consume a product involves giving up another product. The real cost of an action is the next best alternative forgone.

  • Outward oriented development - Government policy that attempts to achieve development by encouraging free trade and the unrestricted movement of labour and capital


  • Parallel economy - The production that takes place outside of the declared and formal circular flow of income.

  • Parastatals - Large state owned enterprises

  • Pareto Optimal - When no one can be made better off without someone else being made worse off, following a reorganisation of production or distribution.

  • Paris Club - A group formed by certain industrialised countries that are owed substantial amounts of debt by less developed countries

  • Physical Quality of Life Index - A composite indicator of development composed from life expectancy, literacy rate, and infant mortality

  • Polygamy - A system where a husband can have more that one wife

  • Population pyramid - Graph showing the age structure of the population

  • Positive externalities - 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. These are also known as external benefits. 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

  • Price band - A range within which a price is able to move. This will result from intervention in a market that sets minimum and maximum prices.

  • Price ceiling - A maximum limit for a price above which it is prevented from moving

  • Price elasticity of demand - Measures the responsiveness of demand to a given change in price. It is calculated by taking the percentage change in demand and dividing by the percentage change in price.

  • Price floor - A minimum limit for a price below which it is prevented from moving

  • Primary education - The first level of education that usually provides the basic elements of education

  • Primary industry - That part of the economy concerned with agriculture and the extraction of raw materials

  • Primary products - Commodities produced by the extractive industries such as farming, fishing, forestry, and mining

  • Privatisation - The process of moving activity from the public sector to the private sector. Often used to describe the process of floating shares in nationalised industries to return them to private ownership.

  • Producer surplus - The difference between the minimum price a producer would accept to supply a given quantity of a good and the price actually received

  • Production possibility curve - A graph that shows the combination of two goods that a country can produce using all of its resources in the most efficient way

  • Production quota - A limit on the amount of a good produced

  • Productive efficiency - When a firm produces at the lowest unit cost i.e. where MC = AC.

  • Productivity - The efficiency with which the factors of production are used. It can be calculated by taking total output and dividing by the number of factors of production. The higher this figure, the more productive the factors of production are.

  • Property Rights - These are the rights to ownership of an asset such as land

  • Protectionism - The practice of taking steps to protect what one sees as one's own interests. Most commonly used to describe steps taken by countries to protect their domestic industries from foreign competition.

  • Public goods - Items which can be jointly consumed by many consumers simultaneously without any loss in quantity or quality of provision e.g. a lighthouse. Public goods are therefore goods that would not be provided in a pure free-market system. This is because they display two particular characteristics:

    1. Non-rivalry - consumption by one person does not reduce the amount available for others.

    2. Non-excludability - once the good is provided it is impossible to stop people consuming it even if they haven't paid. An example of this is defence. It is impossible to charge people for defence as they consume it as the whole country is being defended at once. Also one person being defended does not stop others being defended.

  • Purchasing power parity - At the PPP rate the GDP of a country has been adjusted so that it reflects the internal purchasing power of the currency


  • Quotas - Limits on the amount of a good produced, imported, exported or offered for sale.


  • Recession - A period of negative economic growth at the trough of the trade cycle. A recession is usually defined as two consecutive quarters of negative economic growth.

  • Relative Poverty - The level of poverty in a country expressed in term of certain level of income such as half of the average wage

  • Revaluation - The value of the exchange rate increasing due to market forces

  • Rural urban migration - The migration of people from rural areas to urban areas