REVIEWER IN FINALS IN ECODEV

_________________________1.A situation of being unable to meet the minimum levels of income,

food, clothing, health care, shelter, and other essentials.

_________________________2. An economy in which production is mainly for personal consumption

and the standard of living yields little more than basic necessities of life—food, shelter, and clothing

_________________________3. The process of improving the quality of all human lives and capabilities
by raising people’s levels of living, self-esteem, and freedom.

_________________________4. Countries of Asia, Africa, the Middle East, Latin America, eastern
Europe, and the former Soviet Union that are presently characterized by low levels of living and other
development deficits. Used in the development literature as a synonym for less developed countries.

_________________________5.was the first “development economist” and that his Wealth of Nations,
published in 1776, was the first treatise on economic development, the systematic study of the
problems and processes of economic development in Africa, Asia, and Latin America has emerged only
over the past five decades or so.

3 The Nature of Development Economics

1.
2.
3.

_________________________6.An approach to economics that emphasizes utility, profit maximization,

market efficiency, and determination of equilibrium.

_________________________7.The attempt to merge economic analysis with practical politics— to

view economic activity in its political context.

_________________________8.The study of how economies are transformed from stagnation to

growth and from lowincome to high-income status, and overcome problems of absolute poverty

__________________________9. The now economically advanced capitalist countries of western

Europe, North America, Australia, New Zealand, and Japan.

__________________________10. A synonym for developing countries.

___________________________11.The increasing integration of national economies into expanding

international markets.

___________________________12.The organizational and institutional structure of a society, including

its values, attitudes, power structure, and traditions.
_________________________13.Principles, standards, or qualities that a society or groups within it
considers worthwhile or desirable.

_________________________14.The states of mind or feelings of an individual, group, or society

regarding issues such as material gain, hard work, saving for the future, and sharing wealth.

_________________________15.Norms, rules of conduct, and generally accepted ways of doing things.

Economic institutions are humanly devised constraints that shape human interactions, including both
informal and formal “rules of the game” of economic life in the widely used framework of Douglass
North.

_________________________16.Total gross national income of a country divided by its total

population.

_________________________17.The total domestic and foreign output claimed by residents of a

country. It comprises gross domestic product (GDP) plus factor incomes accruing to residents from
abroad, less the income earned in the domestic economy accruing to persons abroad.

_________________________18.The total final output of goods and services produced by the country’s
economy, within the country’s territory, by residents and nonresidents, regardless of its allocation
between domestic and foreign claims.

_________________________19.The view that income and wealth are not ends in themselves but
instruments for other purposes goes back at least as far as Aristotle. ___________,the 1998 Nobel
laureate in economics, argues that the “capability to function” is what really matters for status as a poor
or nonpoor person.

________________________20.What people do or can do with the commodities of given characteristics

that they come to possess or control.

________________________21.The freedoms that people have, given their personal features and their
command over commodities.

________________________22.is part of human well-being, and greater happiness may in itself expand
an individual’s capability to function.

Three Core Values of Development

1.
2.
3.

_________________________23.The basic goods and services, such as food, clothing, and shelter, that
are necessary to sustain an average human being at the bare minimum level of living.
_________________________24.The feeling of worthiness that a society enjoys when its social,
political, and economic systems and institutions promote human values such as respect, dignity,
integrity, and self-determination.

_________________________25.A situation in which a society has at its disposal a variety of

alternatives from which to satisfy its wants and individuals enjoy real choices according to their
preferences.

The Three Objectives of Development

1.
2.
3.

__________________________26.A set of eight goals adopted by the United Nations in 2000: to

eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality
and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria, and
other diseases; ensure environmental sustainability; and develop a global partnership for development.
The goals are assigned specific targets to be achieved by 2015.

The Eight Future of the Millennium  Development Goals

1.
2.
3.
4.
5.
6.
7.
8.

________________________27.A subset (part) of an economy, with four usages in economic

development: technology (modern and traditional sectors); activity (industry or product sectors); trade
(export sector); and sphere (private and public sectors)

_________________________28.is a distinct yet very important extension of both traditional economics

and political economy. While necessarily also concerned with efficient resource allocation and the
steady growth of aggregate output over time, development economics focuses primarily on the
economic, social, and institutional mechanisms needed to bring about rapid and large-scale
improvements in standards of living for the masses of poor people in developing nations.

_________________________29.An organization known as an “international financial institution” that

provides development funds to developing countries in the form of interest-bearing loans, grants, and
technical assistance.
________________________30.In the World Bank classification, countries with a GNI per capita of less
than $1,025 in 2011.

________________________31. In the World Bank classification, countries with a GNI per capita
between $1,025 and $12,475 in 2011

________________________32. Countries at a relatively advanced level of economic development with

a substantial and dynamic industrial sector and with close links to the international trade, finance, and
investment system.

_________________________33.A UN designation of countries with low income, low human capital,

and high economic vulnerability.

_________________________34.Productive investments in people, such as skills, values, and health

resulting from expenditures on education, on-the-job training programs, and medical care.

_________________________35.was introduced at the International Finance Corporation to suggest

progress (avoiding the then-standard phrase Third World that investors seemed to associate with
stagnation).

3 Basic Indicators of Development:

1.
2.
3.

___________________________36.The total domestic and foreign output claimed by residents of a

country, consisting of gross domestic product (GDP) plus factor incomes earned by foreign residents,
minus income earned in the domestic economy by nonresidents.

___________________________37.The portion of a product’s final value that is added at each stage of

production.

___________________________38.The wearing out of equipment, buildings, infrastructure, and other

forms of capital, reflected in write-offs to the value of the capital stock.

___________________________39.The total amount of physical goods existing at a particular time that

have been produced for use in the production of other goods and services.

___________________________40.The total final output of goods and services produced by the

country’s economy within the country’s territory by residents and nonresidents, regardless of its
allocation between domestic and foreign claims

___________________________41.Calculation of GNI using a common set of international prices for all

goods and services, to provide more accurate comparisons of living standards.
2 Holistic Measures of Living Levels and Capabilities.

1.
2.

___________________________42.An index measuring national socioeconomic development, based on

combining measures of education, health, and adjusted real income per capita.

___________________________43.The concept that the subjective value of additional consumption

lessens as total consumption becomes higher.

10 Characteristics of the Developing World: Diversity within Commonality

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

_________________________44.The number of children born alive each year per 1,000 population.

_________________________45.The proportion of the total population aged 0 to 15 and 65+, which is

considered economically unproductive and therefore not counted in the labor force.

_________________________46.Significant ethnic, linguistic, and other social divisions within a country

_________________________47.is associated with high productivity and incomes and has been a
hallmark of modernization and national economic power

_________________________48.A nation’s supply of usable factors of production, including mineral

deposits, raw materials, and labor.

_________________________49.Facilities that enable economic activity and markets, such as

transportation, communication and distribution networks, utilities, water, sewer, and energy supply
systems.

_________________________50.A market in which the theoretical assumptions of perfect competition

are violated by the existence of, for example, a small number of buyers and sellers, barriers to entry, and
incomplete information.
_________________________51. The absence of information that producers and consumers need to
make efficient decisions resulting in underperforming markets.

_________________________52.The acknowledged right to use and benefit from a tangible (e.g., land)
or intangible (e.g., intellectual) entity that may include owning, using, deriving income from, selling, and
disposing.

_________________________53.Most developing countries were once colonies of Europe or otherwise

dominated by European or other foreign powers, and institutions created during the colonial period
often had pernicious effects on development that in many cases have persisted to the present day.

8 How Low-Income Countries Today Differ from Developed Countries in Their Earlier Stages

1.
2.
3.
4.
5.
6.
7.
8.

__________________________54.The emigration of highly educated and skilled professionals and

technicians from the developing countries to the developed world.

__________________________55.is that the mere possibility of skilled emigration may encourage many
more workers to acquire information technology or other skills than are ultimately able to leave, leading
to a net increase in labor force skills.

__________________________56.Trade in which goods can be imported and exported without any

barriers in the forms of tariffs, quotas, or other restrictions.

__________________________57.The ratio of a country’s average export price to its average import

price.

__________________________58.Scientific investigation with a view toward improving the existing

quality of human life, products, profits, factors of production, or knowledge.

__________________________59.A tendency for per capita income (or output) to grow faster in higher-
income countries than in lower-income countries so that the income gap widens across countries over
time (as was seen in the two centuries after industrialization began).

__________________________60.The tendency for per capita income (or output) to grow faster in
lower-income countries than in higher-income countries so that lower-income countries are “catching
up” over time. When countries are hypothesized to converge not in all cases but other things being
equal (particularly savings rates, labor force growth, and production technologies), then the term
conditional convergence is used.

_________________________61.“Humanly devised” constraints that shape interactions (or “rules of

the game”) in an economy, including formal rules embodied in constitutions, laws, contracts, and
market regulations, plus informal rules reflected in norms of behavior and conduct, values, customs, and
generally accepted ways of doing things.

21Arrow- Long-Run Causes of Comparative Development (13)

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Classic Theories of Economic Development: Four Approaches

1.
2.
3.
4.

__________________________62. A theory of economic development, associated with the American

economic historian Walt W. Rostow, according to which a country passes through sequential stages in
achieving development.

__________________________63.A functional economic relationship in which the growth rate of gross

domestic product (g) depends directly on the national net savings rate (s) and inversely on the national
capital-output ratio (c).

__________________________64.A ratio that shows the units of capital required to produce a unit of
output over a given period of time.

__________________________65.Savings expressed as a proportion of disposable income over some

period of time.
___________________________66.A condition that must be present, although it need not be in itself
sufficient, for an event to occur. For example, capital formation may be a necessary condition for
sustained economic growth (before growth in output can occur, there must be tools to produce it). But
for this growth to continue, social, institutional, and attitudinal changes may have to occur.

___________________________67.A condition that when present causes or guarantees that an event

will or can occur; in economic models, a condition that logically requires that a statement must be true
(or a result must hold) given other assumptions.

___________________________68.The hypothesis that underdevelopment is due to underutilization of

resources arising from structural or institutional factors that have their origins in both domestic and
international dualism. Development therefore requires more than just accelerated capital formation.

___________________________69.The process of transforming an economy in such a way that the

contribution to national income by the manufacturing sector eventually surpasses the contribution by
the agricultural sector. More generally, a major alteration in the industrial composition of any economy

___________________________70.A theory of development in which surplus labor from the traditional

agricultural sector is transferred to the modern industrial sector, the growth of which absorbs the
surplus labor, promotes industrialization, and stimulates sustained development

___________________________71.The excess supply of labor over and above the quantity demanded
at the going free-market wage rate. In the Lewis two-sector model of economic development, surplus
labor refers to the portion of the rural labor force whose marginal productivity is zero or negative.

___________________________72.A technological or engineering relationship between the quantity of

a good produced and the quantity of inputs required to produce it.

___________________________73.Total output or product divided by total factor input (e.g., the

average product of labor is equal to total output divided by the total amount of labor used to produce
that output).

__________________________74.The increase in total output resulting from the use of one additional
unit of a variable factor of production (such as labor or capital). In the Lewis two-sector model, surplus
labor is defined as workers whose marginal product is zero.

__________________________75.Economic growth that continues over the long run based on saving,
investment, and complementary private and public activities.

__________________________76.An attempt to identify characteristic features of the internal process

of structural transformation that a “typical” developing economy undergoes as it generates and sustains
modern economic growth and development.

__________________________77.The reliance of developing countries on developed-country economic

policies to stimulate their own economic growth. Dependence can also mean that the developing
countries adopt developed-country education systems, technology, economic and political systems,
attitudes, consumption patterns, dress, and so on

__________________________78.In international affairs, a situation in which the developed countries

have much greater power than the less developed countries in decisions affecting important
international economic issues, such as the prices of agricultural commodities and raw materials in world
markets.

__________________________79.A model whose main proposition is that underdevelopment exists in

developing countries because of continuing exploitative economic, political, and cultural policies of
former colonial rulers toward less developed countries.

__________________________80.An economic situation characterized by persistent low levels of living

in conjunction with absolute poverty, low income per capita, low rates of economic growth, low
consumption levels, poor health services, high death rates, high birth rates, dependence on foreign
economies, and limited freedom to choose among activities that satisfy human wants.

_________________________81.In dependence theory, the economically developed world.

_________________________82.In dependence theory, the developing countries.

_________________________83.In dependence theory, local elites who act as fronts for foreign
investors.

_________________________84.The proposition that developing countries have failed to develop

because their development strategies (usually given to them by Western economists) have been based
on an incorrect model of development, one that, for example, overstresses capital accumulation or
market liberalization without giving due consideration to needed social and institutional change.

__________________________85.The coexistence of two situations or phenomena (one desirable and

the other not) that are mutually exclusive to different groups of society—for example, extreme poverty
and affluence, modern and traditional economic sectors, growth and stagnation, and higher education
among a few amid large-scale illiteracy

_________________________86.A closed economy that attempts to be completely self-reliant.

_________________________87.The 1980s resurgence of neoclassical free-market orientation toward

development problems and policies, counter to the interventionist dependence revolution of the 1970s.

_________________________88.The system whereby prices of commodities or services freely rise or

fall when the buyer’s demand for them rises or falls or the seller’s supply of them decreases or
increases.

_________________________89.Theoretical analysis of the properties of an economic system operating

with free markets, often under the assumption that an unregulated market performs better than one
with government regulation.
__________________________90.The theory that self-interest guides all individual behavior and that
governments are inefficient and corrupt because people use government to pursue their own agendas.

__________________________91.The notion historically promulgated by the World Bank that

successful development policy requires governments to create an environment in which markets can
operate efficiently and to intervene only selectively in the economy in areas where the market is
inefficient.

__________________________92.A market’s inability to deliver its theoretical benefits due to the

existence of market imperfections such as monopoly power, lack of factor mobility, significant
externalities, or lack of knowledge. Market failure often provides the justification for government
intervention to alter the working of the free market.

__________________________93.The number of units of capital per unit of labor.

__________________________94.Growth model in which there are diminishing returns to each factor

of production but constant returns to scale. Exogenous technological change generates longterm
economic growth.

__________________________95.An economy in which there are no foreign trade transactions or other

economic contacts with the rest of the world.

__________________________96.An economy that practices foreign trade and has extensive financial
and nonfinancial contacts with the rest of the world