Term
| Low Income Countries (LIC) |
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| Lower Middle Income Countries (LMC) |
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| Upper Middle Income Countries (UMC) |
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| High Income OECD Countries |
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| Gross National Income (GNI) |
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Definition
Defined as the total value added produced by a country's residents, both at home and abroad.
GNI = GDP - income paid to foreign entities + income earned abroad
GNI > GDP = Countries with large expatriate populations or significant investment abroad
GNI < GDP = Countries with large foreign investment or large numbers of guest workers. |
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| Problems with GNI as a Measure of Development |
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Definition
Leisure Time
The Environment
Quality of Life
Technological Improvements |
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Very large (On average, in excess of 40% of GNI in developing countries, over 10% of GNI in developed countries)
Benefits:
Bypass regulation
Avoid taxation
Costs:
Punishment if caught
Loss of legal protection in the official economy |
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Term
| The "Catch-22" of a large shadow economy: |
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Definition
| Governments lose tax revenue, but if they raise taxes, this will simply drive more people into the shadow economy. |
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Term
| Human Development Index (HDI) |
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Definition
The HDI is an index computed from three goals/end products of development:
1. Longevity: How long can people in a country expect to live?
2. Knowledge: How literate is the population? How much education do they have?
3. Standard of Living: How much purchasing power foes the average person in the country have? |
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| HDI = 1/3*Income Index + 1/3*Longevity Index + 1/3*Education Index |
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Should we weigh education, income, and longevity equally?
The HDI doesn't account for the quality of education when looking at gross enrollment.
The HDI doesn't factor in quality of life when looking at life expectancy.
What about environmental factors?
Quality of the data? |
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| What is the key thing that HDI focuses on to make it valuable as a metric? |
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