Development Economics Glossary

A condition where individuals lack the minimum income or resources necessary to meet basic needs such as food, shelter, and clothing. The World Bank defines extreme poverty as living on less than $2.15 per day (2017 purchasing power parity).

The emigration of highly trained or qualified people from a developing country to a developed one, depleting the source country of its human capital and reducing returns on public education investment.

The large-scale movement of financial assets and capital out of a country due to political instability, economic uncertainty, or unfavorable policies, reducing the domestic resources available for investment and development.

The hypothesis that poorer economies will tend to grow faster than wealthier ones over time, eventually closing the income gap. Conditional convergence accounts for differences in institutions, policies, and human capital.

A situation where a developing country borrows heavily, struggles to service its debt obligations, and must take on additional debt to repay existing loans, diverting resources from development and creating a cycle of indebtedness.

The shift from high birth and death rates to low birth and death rates as a country develops, typically moving through stages of declining mortality followed by declining fertility, with population growth in between.

An economic condition where a surge in revenue from natural resource exports causes the national currency to appreciate, making other sectors of the economy less competitive and potentially leading to deindustrialization.

An economic development strategy that emphasizes producing goods for international markets as the primary engine of growth, leveraging comparative advantages and economies of scale, as exemplified by the East Asian Tigers.

Investment made by a firm or individual in one country into business interests in another country, typically involving establishing operations or acquiring tangible assets, bringing capital, technology, and management expertise.

A statistical measure of income or wealth inequality in a population, ranging from 0 (perfect equality) to 1 (perfect inequality), commonly used to compare inequality across countries and over time.

The period from the 1960s to 1980s when advances in agricultural technology, including high-yield crop varieties, chemical fertilizers, and irrigation, dramatically increased food production in developing countries, particularly in Asia and Latin America.

The total income earned by a country's residents and businesses, including investment income flowing from overseas, used as an alternative to GDP for measuring a country's economic performance and standard of living.

The economic value of a worker's skills, knowledge, experience, and health. Investment in human capital through education and healthcare is considered essential for long-term economic development.

The economic rationale for protecting new domestic industries from international competition through tariffs or subsidies until they achieve economies of scale, gain experience, and become competitive on world markets.

Economic activities that are not regulated, taxed, or monitored by the government, including street vendors, domestic workers, and small-scale producers. In many developing countries, the informal sector accounts for a majority of employment.

Government-initiated redistribution of agricultural land from large landowners to landless or land-poor farmers, aimed at reducing rural inequality, increasing agricultural productivity, and improving the livelihoods of the rural poor.

A United Nations designation for countries with the lowest indicators of socioeconomic development, based on criteria including gross national income per capita, human assets index, and economic vulnerability index.

Eight international development goals established by the United Nations in 2000 for the year 2015, targeting poverty, education, gender equality, child mortality, maternal health, HIV/AIDS, environmental sustainability, and global partnership.

An exchange rate adjustment that allows meaningful comparison of income and living standards across countries by accounting for differences in the price levels of goods and services in different economies.

Money sent by migrant workers back to their home countries, constituting a major source of income for many developing nations and often exceeding official development assistance in magnitude.

The practice of manipulating public policy or economic conditions to increase profits without creating new wealth, such as lobbying for favorable regulations, subsidies, or trade protections. Prevalent rent-seeking hinders development by diverting resources from productive activity.

Economic reform programs imposed by the IMF and World Bank as conditions for loans to developing countries, typically requiring fiscal austerity, trade liberalization, privatization, and deregulation. They remain controversial for their social impact.

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs, integrating economic growth, social inclusion, and environmental protection.

The ratio of a country's export prices to its import prices, measuring the purchasing power of exports. Declining terms of trade for commodity-exporting developing countries can undermine growth, a problem highlighted by the Prebisch-Singer hypothesis.

A set of ten economic policy recommendations for developing countries promoted by Washington-based institutions in the 1990s, including fiscal discipline, trade liberalization, privatization, deregulation, and secure property rights.