Unit 2 Macro: Growth and Development Glossary

A short selection of key terms connected to economic growth and development for AS macro students

Brain drain
The movement of highly skilled or professional people from their own country to another country where they can earn more money

BRIC countries
Brazil, Russia, India and China - short hand for a group of fast-growing countries

Capital flight
The rapid movement of large sums of money out of a country per due to a lack of confidence in a country’s economy and/or its currency and political turmoil

Catch-up effect
When countries that start off poor but grow more rapidly than countries that start off rich causing convergence in the standard of living measured by per capita GDP

Comparative advantage
The relative advantage that one country has over another. Countries can benefit from specializing in and exporting the product(s) with the lowest opportunity cost of supply

Debt forgiveness
The cancelling by a creditor of a debt to a country or a company

De-industrialization
A decline in the share of national income from manufacturing industries

Economic nationalism
The idea that a country’s economy will perform best if its industries are protected from competition, for example by taxes on imported goods

Economic structure
The balance of output drawn from different economic sectors – ranging from primary (farming, fishing, mining etc) to secondary (manufacturing and construction industries) to tertiary and quaternary sectors (tourism, banking, software industries)

Data from Timetric.

To view this graph, please install Adobe Flash Player.

United Kingdom from Timetric

Foreign direct investment
FDI is the acquisition of a controlling interest in productive operations abroad by companies resident in the home economy. May involve the creation of new productive capacity such as a new factory

Gini Coefficient
Measure of the extent to which groups of households, from the bottom of the income distribution upwards, receive less than an equal share of income.

Gross Domestic Product per capita
National income per head of population

Gross National Income (GNI)
The same as GDP except that it adds what a country earns from overseas investments and subtracts what foreigners earn in a country and send back home

Human Development Index
An index devised to assess comparative levels of development in countries, quantified in terms of literacy, life expectancy and purchasing power

Innovation
Changes to products or production processes – innovation is important in delivering improvements in dynamic efficiency

Investment
Spending on capital goods including plant & machinery and infrastructure

Data from Timetric.

To view this graph, please install Adobe Flash Player.

United Kingdom from Timetric

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

Living standard
The amount of wealth or comfort that a person, group, or country has. The standard measure of average living standards is GNI (gross national income) per capita measured in a common currency and adjusted for differences in the cost of living between countries i.e. GNI per capita (PPP) – purchasing power parity adjusted

Lorenz Curve
A way of showing the unequal distribution of income and wealth in an economy

Primary sector
An industry involved in the production of raw materials including agriculture

Purchasing Power Parity (PPP)
The exchange rate that equates the price of a basket of identical traded goods and services in two countries

Remittances
Sending of money to people in another country for example migrant workers sending some of their wages to their home country

Sovereign wealth fund (SWF)
A government or state run fund usually created by profits from natural resources such as oil, gas or minerals. Highly secretive, their assets grew dramatically when oil prices rose to record levels. Some of the largest SWFs are in the oil-rich Middle East

Sustainable growth
Growth without non-renewable resources being used up or pollution becoming intolerable

Trend growth
The long run average growth rate – mainly determined by changes in the stock of available factor inputs and also improvements in productivity

Data from Timetric.

To view this graph, please install Adobe Flash Player.

United Kingdom from Timetric