Unit 5 Guide: Economic Policy, Globalization, and Development in Comparative Politics

Economic Liberalization

The policy of reducing government intervention in the economy to encourage free-market principles.

Reduction of Tariffs

Lowering taxes on imports to promote free trade.

Privatization

The process of selling state-owned enterprises to private investors to enhance efficiency.

Removal of Subsidies

Cutting government financial support for certain industries, often leading to short-term social unrest.

Foreign Direct Investment (FDI)

Encouraging foreign companies to invest by easing restrictions on building factories or investing in a country.

Special Economic Zones (SEZs)

Areas in China where market-oriented economic reforms are allowed while maintaining political control.

Import Substitution Industrialization (ISI)

A policy aimed at protecting domestic industries by imposing high tariffs on imports.

Shock Therapy

Rapid economic liberalization often associated with the transition from a command to a market economy.

Re-nationalization

The process of bringing previously privatized industries back under government control, seen in sectors like oil and natural gas in Russia.

Rentier State

A country that derives a significant portion of its revenue from the export of natural resources instead of taxation.

Resource Curse

The paradox where countries rich in natural resources experience less economic growth and poorer development outcomes.

Gini Index

A mathematical formula that quantifies economic inequality in a society, with 0 representing perfect equality and 100 perfect inequality.

Purchasing Power Parity (PPP)

An economic theory that aims to compare the relative value of currencies based on cost of living and inflation rates.

Human Development Index (HDI)

A composite statistic used to measure a country's overall social and economic development based on life expectancy, education, and income.

Globalization

The increasing interconnectedness of countries through trade, investment, migration, and cultural exchange.

Interdependence

The reliance of countries on each other for goods, services, and economic stability.

Multinational Corporations (MNCs)

Companies that operate in multiple countries and contribute to globalization through foreign investments.

Structural Adjustment Programs (SAPs)

Economic policies prescribed by the IMF or World Bank that require borrowing countries to make austerity measures.

Supranational Organizations

International groups where member states cede some sovereignty for political or economic benefits.

The European Union (EU)

A supranational organization that promotes economic integration and collective decision-making among its member states.

World Trade Organization (WTO)

An intergovernmental organization that regulates international trade and lowers trade barriers.

International Monetary Fund (IMF)

An international financial institution that offers loans and assistance to countries facing economic difficulties.

Economic Community of West African States (ECOWAS)

A regional organization that promotes economic cooperation and security among West African countries.

Political democratization

The transition towards a more democratic government structure, often mistakenly associated with economic liberalization.

The Pound Sterling

The official currency of the United Kingdom, which it retained even as a member of the EU.

Vertical Inequality

Economic disparity between different economic sectors or regions, often highlighted during the discussion of the Gini Index.