Select the first letter of the word from the list above to
jump to appropriate section of the glossary..
- AUSTERITY MEASURES
Reduced government spending. In order tostabilize LDC
economies, many third world governments are being told by
the IMF, World Bank, and other lenders that they must
reduce deficit spending. Austerity measures result in
less government support for health, education, and
infrastructure.
- BIO-DIVERSITY
The earth's vast array of plant and animal species. Many
of the existing plant and animal species have yet to be
fully studied and some scientists project that existing
species may hold untapped medical or scientific
potential. Industrialization and deforestation currently
result in the loss and extinction of plant and animal
species.
BRADY PLAN
A third world debt restructuring plan proposed by former
U.S. Secretary of the Treasury, Nicholas Brady, in 1989.
The details of the Brady Plan are negotiated individually
with each participating nation. However, the basic
framework offers some debt forgiveness and interest rate
reduction in exchange for economic reforms including
austerity measures, trade liberalization, and
privatization.
BRETTON WOODS
The international monetary system created in 1944 to
stabilize international exchange rates and control
international finances following the Great Depression and
World War II. The Bretton Woods system collapsed in 1971
when the US abandoned the gold standard.
- CARRYING CAPACITY
The ability of the earth or a specific area of the earth
to maintain population and human activity.
CHEMICAL WEAPONS
Gases and chemicals that are developed for potential use
in wartime against enemy troops, populations, or
eco-systems.
CONVENTIONAL ARMS
Non-nuclear weapons.
- DEBT DEFAULT
Failure to make the required debt or interest payment
without making arrangements with the lending government
or institution.
DEBT MORATORIUM
A temporary suspension of debt or interest payments.
DEBT RESTRUCTURING
Various proposals for relieving the debt burden of
developing countries. The indebtedness of many developing
countries has been increasing dramatically since 1973;
most of the loans have been granted by private commercial
banks rather than foreign governments. Many governments
are currently unable to service their debt. Debt
restructuring could involve complete or partial debt
forgiveness, temporary or permanent debt moratorium,
interest rate
DEBT SERVICING
Payment of the basic installments as due on the loans.
Without the ability to service the existing debt, many
nations find that they are unable to obtain additional
loans that they need to maintain government services.
Debt servicing is not debt payment; the service payments
are usually only a portion of the interest owed, and the
debt continues to mount as unpaid interest is added to
the original principal.
DEFORESTATION
The destruction of the world's forests, mainly rain
forests, through direct human activity such as logging or
slash and burn clearing for agriculture and grazing, and
the indirect effects of pollution and acid rain.
DEVELOPING COUNTRIES
The poor, often indebted countries of the world that are
currently trying to industrialize or develop alternative
methods of supporting their populations. (See Third
World.)
- EUROPEAN CURRENCY UNIT (ecu)
The single EU currency proposed under the Maastricht
Treaty.
EUROPEAN FREE TRADE ASSOCIATION (EFTA)
A free trade zone including many non-EU countries in
Europe. Members include Austria, Finland, Iceland,
Norway, Sweden, and Switzerland.
EXCHANGE RATE MECHANISM
Europe's system to stabilize currency values by linking
the value of all EC member currencies to the German Mark.
The permitted fluctuation from the Mark was widened in
August 1993 to give EC members more freedom to adjust
economic policies in an attempt to end the European
recession.
- FREE TRADE ZONE
An agreement between two or more nations to eliminate
tariffs and trade barriers.
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- HARD CURRENCY
An internationally accepted means of exchange. Hard
currencies are currently considered to be U.S. dollars,
Japanese yen, and German Marks. Since most international
obligations must be paid in hard currency, it is very
important to have enough exports, which bring in hard
currency, to be able to meet foreign obligations.
- INFRASTRUCTURE
Services and facilities that support day to day economic
activity. Infrastructure includes roads, electricity,
telephone service, and public transportation.
Infrastructure has traditionally been provided and
maintained by the government. However, some nations are
currently experimenting with privatization of some
elements of the infrastructure.
INTELLECTUAL PROPERTY RIGHTS
The legal protection of patent and copyright laws.
Companies are often reluctant to do business in a nation
that does not provide legal protection for their patents.
Some LDC's are reluctant to provide patent protection
because it prevents domestic industries from competing in
the field and often keeps prices of products too high for
domestic consumers.
INTERNATIONAL MONETARY FUND (IMF)
An independent international organization created in 1945
as a result of the Bretton Woods conference. The IMF has
as its chief purpose the maintenance of international
monetary stability.
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- MAASTRICHT TREATY
The EU treaty adopted in 1993 that outlines plans for a
single currency, coordinated social policy, and
coordinated foreign policy.
MOST FAVORED NATION STATUS
The application of the lowest tariff rate given to any
other nation. All members of GATT offer most favored
nation status to each other. Most favored nation status
is granted between non-GATT nations on a bi-lateral
basis.
- NON-TARIFF BARRIER TO TRADE
Regulations or requirements designed to meet non-trade
related goals, but which limit or restrict imports.
Health regulations may be considered non- tariff barriers
to trade if one nation has higher health standards than
another.
NORTH ATLANTIC TREATY ORGANIZATION
A 16 member collective defense agreement established in
1949 to protect Western Europe. Members include the U.S.,
Canada, and 14 Western European nations.
NUCLEAR PROLIFERATION
The spread of nuclear weapons to states that had not
previously maintained nuclear forces.
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- PRIVATIZATION
The process of selling government owned industries and
services to private companies. Privatization is currently
taking place in the former Soviet Union and Eastern
Europe in the transition to market economies. It is also
taking place in many LDC's that are trying to reduce
government spending and generate income by selling
unprofitable services and industries.
PROTECTIONISM
A policy designed to shield the local economy from
outside competition through high tariffs, subsidies, or
trade restrictions.
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- SOVEREIGNTY
The concept that a nation has complete autonomy to
determine its own policies. There is no higher authority
that dictates the decisions of a nation-state.
SUBSIDY
A payment that a government makes to a producer to
supplement the market price of a commodity. Subsidies can
keep consumer prices low while maintaining a higher
income for domestic producers.
SUSTAINABLE DEVELOPMENT
Changes in the way of life or means of production in a
country or region that improve the standard of living but
are not dependent on outside support and do not deplete
resources. Sustainable development projects often
concentrate on education and the refinement of local
production techniques with a great deal of respect for
local customs and traditions.
- TARIFF
A fee that a government charges to the importer of a
foreign good. Tariffs are passed along to the consumer
through higher prices on imported goods.
THIRD WORLD
The poorest nations of the world. Most third world
nations are in debt to Western banks and governments or
international lending organizations. Many depend on
international aid to meet the basic needs of their
population. (See Developing Countries.)
TRADE DEFICIT
The value of a nations imports exceeds the value of its
exports.
TRADE LIBERALIZATION
The reduction of tariffs and trade barriers to permit
more foreign competition and foreign investment in the
economy.
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- WESTERN EUROPEAN UNION (WEU)
The European defense and peacekeeping structure, formed
in 1954. Members are Belgium, France, Germany, Italy,
Luxembourg, the Netherlands, Portugal, Spain, and the UK.
WORLD BANK
Created as a sister organization to the International
Monetary Fund as a result of the Bretton Woods
conference. Its purpose, after initially emphasizing the
reconstruction of Europe after World War II, has been to
lend funds at commercial rates and to provide technical
assistance in order to facilitate economic development in
its poorer member countries. Officially called the
International Bank for Reconstruction and Development
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