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40 Cards in this Set
- Front
- Back
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Absolute poverty
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Meeting only bare subsistence essentials of food, clothing, and shelter to maintain minimum levels of living
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Subsistence economy
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Production is mainly for personal consumption and the standard of living yields no more than the basic necessities
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Development
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The process of improving the quality of all human lives
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Important aspects of development
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raising levels of living (sustenance) through relevant economic growth processes, self-esteem, freedom
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Developing countries
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high rates of population growth, low income per capita, and general economic and technological dependence on developed economies
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Development economies
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Concerned with the efficient allocation of existing scarce (or idle) productive resources and with their sustained growth over time
Also deals with the economic, social, political, and institutional mechanism, public and private, that are necessary to bring about rapid and large-scale improvements in levels of living |
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MDC
LDC |
More Developed Countries
Less Developed Countries |
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LDC's
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highly imperfect economies
consumers/producers have limited info major structural changes in both society and economy multiple equilibria possible disequilibrium situations often prevail Economic calculations are dominated by political and social priorities Other considerations than utility |
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Value premises
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A value judgment reflects personal or class beliefs.. principles, standards, or qualities considered worthwhile or desirable.
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Social system
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the interdependent relationships between economic and noneconomic factors
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Non-economic variables
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Elements of interest to economists in their work but not given monetary value or expressed numerically because of the intangible nature
E.g. education, health, cultural, political and institutional factors |
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Gross National Income vs. Gross National Product
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GNI: Total domestic and foreign output claimed by residents of a country (total value produced within a country (GDP) combined with its income received from other countries)
GNP: production of any nationals and adding it up |
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Income per Capita
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Total GNP of a country divided by total population
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"Trickle down"
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Rapid gains in overall and per capita GNI growth would “trickle down” to the masses in the forms of jobs and other economic opportunities
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"Development" must include:
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Acceleration of economic growth, reduction of inequality, and eradication of poverty
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Sen's "Functionings"
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what a person does (or can do) with the commodities of given characteristics that they come to possess or control
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5 Sources of disparity between real incomes and actual advantages
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Personal heterogeneity
Environmental diversities Variations in social climate Differences in relational perspectives Distribution within family |
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Sen's "Capabilities"
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freedom that a person has in terms of the choice of functionings
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7 factors affect national happiness
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Family relationships
Financial situation Work Community and friends Health Personal freedom Personal values |
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Absolute underdevelopment
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when any of food, shelter, health or protection are absent or in critically short supply
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Indifference curve
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graph showing different bundles of goods between which a consumer is indifferent, downward sloping (due to trade off)
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Purchasing Power Parity (PPP)
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The purchasing power of a country’s currency: the number of units of that currency required to purchase the same basket of goods and services that a US dollar would buy in the US
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Human Development Index
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calculates an index based on longevity (life expectancy), education (literacy), and real per capita PPP GDP
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Rostow stages model
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Stage 1 – Traditional society
Stage 2 – Preconditions for take-off Stage 3 – Take-off Stage 4 – Drive to maturity Stage 5 – Age of (high) mass-consumption |
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Harrod Domar Model
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Engine of growth: savings and investment
S=I=ΔK=kΔY sY=kΔY |
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Lewis Structural Change Model
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Two sector model
When MPL > 0, inequality will decrease |
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International-Dependence: Neocolonial Dependence Model
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Hub and Spoke model
Unequal power relationship between rich and poor countries |
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International-Dependence: False Paradigm Model
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Underdevelopment is a result of good intentions but inappropriate advice from Western “Experts”
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International-Dependence: Dualistic Development
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“Inferior” versus “superior” set of conditions
no "trickle-down" Lewis Model assumes it |
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Neoclassical Counter-Revolution
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Advocates of ‘free markets’
‘Underdevelopment’: a result of bad state intervention |
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Solow Growth Model
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Adds labour and technology to the H-D Model
Assumes Constant Return to Scale (CRS): γ Y = F(γ K, γ L) |
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Endogenous Growth Theory: The Romer Model
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This model can generate Solow model as a special case.. if Beta = 0
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Size distribution of income
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amounts of income received by the rich, poor, and middle-class individuals or families and often is interpreted as a direct measure of welfare
in terms of income deciles (tenths) or quintiles (fifths) |
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Lorenz curve
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Depicts the cumulative distribution of income
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Head Count Index
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Proportion of individuals living under the poverty line: HCI=H/N
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Poverty Gap
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The amount of money needed to bring everyone below the poverty line up to the poverty line
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Foster-Greer-Thorbecke
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Looks at income inequality among the poor
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Welfare function
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W = W(Y,I,P)
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Dualistic Development
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Modern sector enlargement, traditional sector enlargement and Lewis-style modern sector enlargement (good)
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Poverty and Growth
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Poverty alleviation policies need not be bad for growth
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