Essential Definitions in Global Economics and Social Metrics

Key Economic and Societal Terminology

Gross Domestic Product (GDP)

The total market value of all the goods and services produced within the borders of a nation during a specified period.

Per Capita Income

The total national income divided by the number of people living in the nation. It is often used to measure a country’s standard of living.

Note: It is not the average income because it includes children and the non-working population.

Foreign Debt

The amount a country owes to other countries, either directly as a result of government-to-government loans or indirectly because of a negative balance of trade.

Growth Rate

The annual rate at which a country’s or an industry’s income increases.

Life Expectancy

The age to which an average person is expected to live, based on the person’s sex, health factors, and other determinants.

Globalization

The worldwide movement toward economic, financial, trade, and communications integration. Globalization implies the opening of local and nationalistic perspectives to an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers.

Important Considerations:

• It typically does not include the movement of labor.
• As suggested by some economists, it may hurt smaller or fragile economies if applied indiscriminately.

Economic Globalization

It is a beneficial process that implies the growth of production and economic relationships, but one in which a large number of people are excluded from those benefits. The economic growth is not equally distributed because this financial scheme is characterized by free trade.

Free Trade

The absence of barriers to international trade, achieved through the elimination and reduction of tariffs and the construction of free trade zones. Tariffs were previously used to protect the local market.

World Trade Organization (WTO)

It is the only global international organization dealing with the rules of trade between nations. Its goal is to help producers of goods and services, exporters, and importers conduct their business smoothly.

Key Facts about the WTO

• Created in 1995.
• Had 148 member countries in 2004.

Cultural Diversity

The existence of different cultures within one society.

Acculturation

The exchange of cultural features that results when groups come into continuous firsthand contact. The original cultural patterns of either or both groups may be altered, but the groups remain distinct.