Development Economics Short Questions

Short Questions

1. Absolute poverty is the situation of being unable or only barely able to meet the basic needs of life such as food, clothing, shelter, and basic health care. According to World Bank, nowadays global poverty line is 3 USD per person per day.
2. Absolute poverty line is the minimum level of income required to meet the subsistence essentials of food, clothing, and shelter. Nowadays, the international poverty line is 3 USD per person per day.
3. Brain drain is the emigration of highly educated and skilled professionals and technicians from developing countries to the developed world in search of better job opportunities and living conditions.
4. Capital-output ratio (K/Y) shows the amount of capital required to produce one unit of output. It is denoted by c. Thus, c=K/Y. In Harrod-Domar growth model it si an important determinant of economic growth.
5. Debt servicing is the process of making regular payments on a debt, which includes both interest payments and the repayment of the principal amount to the creditor.
6. Development economics is the subfield of economics which studies how economies are transformed from stagnation to growth and from low income to high income status and overcome the problem of extreme poverty.
7. Economic development can be defined as the process where increase in per capita income or output also leads to improvements in living standard of whole population, reductions in poverty, unemployment and inequality, increased access of basic needs and increased employment opportunities and choices.
8. Economic growth is the increase in the output of goods and services in an economy over time. It is typically measured by the growth rate of GNP per capita.
9. Economic infrastructure refers to the foundational physical and financial capital necessary for economic activities. It includes assets like communication assets, water supplies, financial institutions, electricity, and public services such as health and education.
10. Globalization is the increasing integration of national economies in the international markets through international trade, technology transfer, labor mobility etc.
11. Human capital refers to productive investments in people, such as skills, education, and health resulting from expenditures on education, on-the-job training programs, and medical care.
12. Human development index (HDI) is a composite index to measure socio-economic development of a country. It was introduced by UNDP in 1990. It has three dimensions: long and healthy life, knowledge, and living standard. It ranges from 0 to 1.
13. Industrialization refers to the process by which an economy transforms from primary agriculture to industrial sector. It involves the growth and expansion of industries, technological advancements, urbanization.
14. Informal economy refers to economic activities that are not monitored or regulated by the government. It includes small scale business, home based work, street vendors etc.
15. Least Developed Countries (LDCs): A country that has three characteristics are named as least developed countries: low income, low human capital (health and education), and high economic vulnerability.
16. Life expectancy is defined as the average number of years a person is expected to live based on current mortality rates. It is a key indicator used to measure health and well-being used in HDI.
17. Physical Quality of Life Index (PQLI) is a measure of socio-economic development invented by M.D. Morris in 1979. He constructed a composite index by combining three indicators of infant mortality, life expectancy at age one and basic literacy at age 15. It ranges from 0 to 100.
18. Subsistence economy is an economy in which production is done mainly for personal consumption to meet their own needs rather than for trade or profit.
19. Subsistence farming refers to crop production and livestock rearing conducted mainly for personal consumption with little or no surplus for sale.
20. Subsistence wage refers to the minimum income necessary for a worker to meet their basic needs of food, clothing, shelter and basic healthcare. In Lewis model subsistence wages are determined by average product of labor which are well below urban wages.
21. Surplus labor refers to the labor whose marginal productivity is zero. If we withdraw this labor from agri. sector and employ in modern sector, then there is no effect on agri. output since MPL is zero.
22. Underdevelopment is an economic situation characterized by low level of living, low per capita income, absolute poverty, poor health services, high death rates, high birth rates etc.
23. Urbanization refers to the process by which a country’s population moves from rural areas to urban areas, leading to the growth and expansion of cities and towns. Its major causes include job opportunities, better education and healthcare etc.
24. Vicious circle of poverty is the self-perpetuating cycle where low-income families or countries remain trapped in poverty which transfers across generations. Here is how it works: Low Income → Low Savings → Low Investment → Low Productivity → Low income.
25. Structural transformation: It occurs when the share of manufacturing sector in national income surpasses the share of the agricultural sector. Example: Lewis model of economic development where transfer of surplus labor increases industrial sector output.
26. International dependence models view that developing have failed to develop because they are trapped in a cycle of dependence and dominance of developed countries. These models include neocolonial dependence, false paradigm and dualistic development model.
27. Neocolonial dependence model explains how former colonies remain economically dependent on developed nations through trade imbalances, foreign aid, and the influence of multinational corporations.
28. False-paradigm model states that developing countries have failed to develop because their development policies are often designed by Western economists These strategies are unsuitable for developing countries because they neglect the social, institutional, and cultural factors
29. Dualistic development thesis suggests that developing countries are divided into two opposite situations in which one is desirable and other is not. For example, extreme poverty and affluence, modern and traditional economic sectors, growth and stagnation, higher education to few and illiteracy at large.