Development Economics Glossary - M to Q

Managed floating currency

A floating exchange rate but subject to intervention by the monetary authorities, in order to resist fluctuations that they consider to be undesirable

Market liberalization

Removing state controls that impede the normal functioning of a market economy- for example, lifting price and wage controls and import quotas or lowering taxes and import tariffs.

Marshall-Lerner Condition

The Marshall-Lerner condition predicts the circumstances in which a fall in the exchange rate improves the BoP. A devaluation of a currency improves the BoP only if the combined (or sum of) price elasticities of demand for imports & exports are greater than one.

Mercantilism

The notion that the wealth of a nation was based on how much it could export in excess of its imports, and thereby accumulate precious metals. Applied in the modern context to countries accumulating huge trade surpluses in goods or services and focusing on export-led growth

Micro-credit

Any form of credit service offered to low-income individuals not traditionally serviced by the formal banking sector

Middle income trap

Occurs when a country's growth stagnates after reaching middle income levels. The problem arises when developing economies find themselves stuck in the middle, with rising wages and declining cost competitiveness, unable to compete with advanced economies in high-skill innovations, or with low income, low wage economies in the cheap production of manufactured goods

Millennium Development Goals (MDG)

MDGs are eight internationally-agreed targets which aim to reduce poverty, hunger, maternal and child deaths, disease, inadequate shelter, gender inequality and environmental degradation by 2015

Multidimensional Poverty Index

An international measure of acute poverty covering 109 developing countries.

Multilateral Aid

Aid channeled through international bodies for use in or on behalf of aid recipient countries

N-11

Countries with fast-growth potential and of a size that makes them significant in the world economy. They are Bangladesh, Egypt, Iran, Nigeria, Pakistan, Philippines, Vietnam, Mexico, Korea, Turkey, Indonesia

NAFTA

North American Free Trade Agreement - a free trade area agreement signed by the US, Canada and Mexico

National savings

National saving is total public and private sector saving measured as a share of GDP. Saving is the difference between income and consumption. In countries such as China, the national savings rate is high in contrast to developed economies. Gross national saving measured as a percentage of GDP in 2008 for China was 54.3%

Natural assets

Assets of the natural environment - biological assets (produced or wild), land and water areas with their ecosystems, subsoil assets and air

Natural capital

The stock of natural ecosystems that yields a flow of valuable ecosystem goods or services into the future. Natural capital may also provide services like recycling wastes or water catchment and erosion control

Net inward migration

When the number of migrants coming into a country is greater than those leaving in a given time period

NGOs

Private non-profit making bodies which are active in development work

NIE

Abbreviation for newly industrializing economy

Nominal exchange rate

The nominal exchange rate is the price of the domestic currency (say the UK pound) in another foreign currency (say, U.S. dollars), currently about US $1.55 or so. Thus to buy 1 UK pound you must spend 1.55 US dollars

Nominal interest rate

The nominal interest rate is the price of borrowing a unit of domestic currency for some period of time

ODA

Abbreviation for official development assistance

OECD

Organisation of Economic Co-operation and Development

Official Development Assistance

Loans, grants, and technical assistance provided to developing countries

Off-shore banking

Banks based abroad in a country where you pay less tax

Outward oriented development

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

Overseas assets

Assets such as businesses, shares, property which are owned in overseas countries and which might generate a flow of investment income which is a credit item on the current account of the balance of payments.

Penn-Balassa-Samuelson effect

The Penn-Balassa-Samuelson effect states that, even if accounting for PPPs, the price level is higher in richer countries. Some evidence finds that for the poorest countries, the relationship is downward sloping

Potential output

The economy's maximum productive capacity in a physical sense. The largest output that could be produced, given the prevailing state of technology

Potential productivity

Estimates of the productivity of the labour force i.e. output per person employed or output per person hour. Improvements in productivity have an important effect on long run aggregate supply and trend growth

PPP Exchange Rate

The rate at which the currency of one country is converted into that of another to purchase the same amount of goods and services in each country

Prebisch-Singer Hypothesis

This is an observation (not a theory) that states that the terms of trade between primary goods and manufactured products deteriorate over time

Primary sector

An industry involved in the production of raw materials including agriculture

Produced capital

Machines, buildings, physical infrastructure

Property rights

These are the rights to ownership of an asset such as land or ideas (intellectual property rights)

Protectionism

The use of tariff and non-tariff restrictions on imports to protect domestic producers from foreign competition

Public Goods

Goods that are non-rival (consumption by one person does not reduce the supply available for others) and non-excludable

Public sector

The public sector is made up of central government, local government and public corporations (state-owned or nationalized industries)

Purchasing Power Parity (PPP)

The current exchange rate is adjusted so that a basket of goods and services can be bought for the same amount of dollars

Quota

A quota imposes a physical limit on the quantity of a good that can be imported into a country in a given period of time.