Development Economics Glossary - H to L

Hard commodities

Commodities which can be mined, such as metals, minerals and oil

Hard infrastructure

Examples include power, transport, and telecommunications systems

Harrod-Domar Growth Model

An idea that aggregate output (GDP) is (for some reason) proportional to the stock of physical capital. Investment is assumed proportional to output, which implies that it is also proportional to the capital stock. Thus some fraction of output is invested, which adds to the capital stock, which increases output

Heavily Indebted Poor Countries Initiative

An initiative to provide debt relief to heavily indebted low income countries

HIPC

Abbreviation for a highly indebted poor country

Hot Money

Money that flows freely and quickly around the world looking to earn the best rate of return. It might be invested in any asset whose value is expected to rise or simply be placed in an account offering the best real rate of interest.

Human Assets Index (HAI)

An index used when focusing on the issues facing many of the world’s least developed countries. The HAI includes data on (i) nutrition (percentage of the population that is undernourished); (ii) health (child mortality rate); (iii) school enrolment (gross secondary school enrolment rate); and (iv) literacy (adult literacy rate)

Human capital flight

Another name for a brain drain – when a country suffers net outward migration of skilled / younger workers which causes their labour force to contract and may have a damaging effect on the level of labour productivity

Human Development Index

The HDI, published annually by the UNDP, has become the most widely used measure for communicating a country’s development status. Compared with the traditional measure of GDP, the HDI is a broader measure of development, since it captures not only the level of income but also incorporates measures of health (life expectancy) and education (school enrolment and literacy rate).

Humanitarian Aid

Assistance in the form of emergency disaster relief, food aid, refugee relief and disaster preparedness

Import substitution

The replacement of imports by domestic production, perhaps protected using import tariffs

Inclusive Wealth Index

Inclusive Wealth Index (IWI) assesses changes in a country’s productive base, including produced, human, and natural capital over time. By taking a more holistic approach, the IWI shows governments the true state of their nation’s wealth and the sustainability of its growth.

Income convergence

Income convergence happens when a nation’s per capita income moves closer to that of another i.e. the gap in relative income per head decreases

Income distribution

Income distribution is how income is divided up among all the citizens in a country. The most common measure of income distribution is the Gini Coefficient.

Inequality-adjusted HDI

The IHDI takes into account not the average achievements of a country on health, education and income, and how those achievements are distributed among its citizens by “discounting” each dimension’s average value according to its level of inequality. The average world loss in HDI due to inequality is about 23%—ranging from 5% (Czech Republic) to 43.5% (Namibia).

Infant industry

New industry that requires government protection from overseas competition (for instance through the setting of import tariffs) in order to develop

Informal sector

The sector of the economy, normally comprising of small businesses, which is unregistered with the tax authorities

Infrastructure

The transport links, communications networks, sewage systems, energy plants and other facilities essential for the efficient functioning of a country and its economy

Intellectual Property (IP)

Private property rights over ideas and inventions including copyrights, patents, trademarks and industrial designs.

International Monetary Fund (IMF)

Intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rate and the balance of payments

Inward oriented development

Government policy that attempts to achieve development by stimulating domestic industry and import substitution behind trade barriers

J Curve Effect

The effect of currency depreciation on the trade deficit depends on price elasticity of demand for exports and imports. The J Curve effect says a trade deficit can worsen after depreciation, but get better in the medium term.

Knowledge capital

The scientific and technological know-how that raises productivity in business output and the promotion of physical and natural capital

Least Developed Countries

A group of countries that have been classified by the United Nations as least developed in terms of their low gross domestic product (GDP) per capita, weak human assets and high degree of economic vulnerability

Lewis Turning Point

A Lewis Turning Point occurs when a country’s surplus labour evaporates, pushing up wages, consumption and inflation rates. Within a country the supply of migrants from the countryside might dry up causing urban wages to surge