International & Development Economics

Globalization is the increasing integration of economies worldwide through trade, investment, technology, and the movement of people.

Protectionism is government policy that shields domestic industries from foreign competition using tariffs, quotas, and subsidies.

Dumping is when a country or firm exports a product at a price below its cost or its home-market price to gain foreign market share.

The WTO is an international body that sets the rules for global trade and helps settle trade disputes between countries.

Purchasing power parity is the idea that exchange rates should adjust so a basket of goods costs the same across countries.

GNP is the total value of goods and services produced by a country's residents, wherever in the world they produce them.

Foreign direct investment is when a firm or individual from one country builds or buys business operations in another country.

The Human Development Index is a composite measure of a country's development based on income, education, and life expectancy.

A developing economy is a country with lower average income, less industrialization, and lower living standards than developed nations.

The Heckscher-Ohlin model predicts that countries export goods that intensively use their relatively abundant factor of production and import goods using their scarce factor.

The Rybczynski theorem says that, at constant prices, increasing one factor's endowment raises output of the good using it intensively more than proportionally and reduces output of the other good.

The Prebisch-Singer hypothesis argues that the long-run terms of trade for primary-commodity exporters tend to deteriorate relative to manufactured-goods exporters.

The Lewis dual-sector model explains development as the transfer of surplus, low-productivity labor from a traditional agricultural sector to a modern industrial sector.

An export subsidy is a government payment to domestic producers for each unit they sell abroad, which raises exports above the free-trade level.

A customs union is a trade bloc whose members remove tariffs on trade with each other and also apply one common external tariff to non-members.

A common market is a customs union that also lets labor and capital move freely between member countries, not just goods and services.

The International Monetary Fund (IMF) is a global institution that lends to countries facing balance of payments crises and monitors the world economy.

The World Bank is an international institution that lends to developing countries for long-term projects and reforms intended to reduce poverty.

A poverty line is an income or consumption threshold below which a household counts as poor, used to measure how much poverty a country has.

Absolute poverty is being below a fixed threshold of income or consumption set by the cost of basic needs, regardless of what everyone else has.

Relative poverty is having income far below the typical income in your own country, usually below half or sixty percent of the national median.

Microfinance is the supply of small loans, savings accounts and insurance to low-income borrowers whom commercial banks turn away for lacking collateral.

Remittances are the money migrant workers send back to households in their home country, recorded as transfers in the current account.

Brain drain is the emigration of a country's highly skilled workers, such as doctors and engineers, to countries offering better pay and conditions.

Dutch disease is the decline of a country's manufacturing and farming after a resource boom raises the real exchange rate and prices their exports out.

The resource curse is the pattern in which countries rich in oil or minerals often grow more slowly and govern worse than countries without them.

Import substitution industrialization is a strategy of building domestic industry behind tariffs and quotas to replace imported manufactured goods.

Export-led growth is a development strategy of growing by selling manufactures on world markets rather than by protecting industry for the home market.

The convergence hypothesis predicts that poorer countries grow faster than richer ones and catch up, since capital earns higher returns where it is scarce.

The middle-income trap is the idea that countries stall at middle income, too costly to compete on cheap labor but not yet able to compete on technology.

A trade bloc is a group of countries that lower trade barriers among themselves while keeping them against outsiders, favoring trade inside the group.

The informal economy is legal production that goes unregistered and untaxed, so its output and its workers are missing from official statistics.

The demographic transition is the shift from high birth and death rates to low ones as incomes rise, with a population surge in between as deaths fall first.

Subsistence agriculture is farming aimed at feeding the household that does the work, leaving only a small marketed surplus and very little cash income.

Foreign aid is money, goods or expertise transferred to a poorer country on better terms than the market offers, as grants or as loans below commercial rates.

A conditional cash transfer pays a poor household a cash grant only if it meets a stated requirement, such as school attendance or clinic visits.

A poverty trap is a self-reinforcing state in which being poor creates the conditions that keep you poor, so income stays low unless a push clears a threshold.

A sovereign default is a government's failure to pay interest or principal on its debt as promised, or a forced restructuring that pays creditors less.