Jargons of Economics-I
Jargons are special words or expressions used by professionals or group that are difficult for others to understand. Terminology used in the economics is of very much Importance, because it helps the students in understanding the meaning of articles/publications/reports etc. We picked some of the most important words to enhance your knowledge of Economics.
The Association of South-east Asian Nations (ASEAN): It is a political, economic, and cultural organization of countries located in South-east Asia—Thailand, Indonesia, Malaysia, Singapore, the Philippines, Brunei Darussalam, Cambodia, Laos, Myanmar and Vietnam.
Balance of Payments (BOP): It is a statistical statement summarizing all the external transactions (receipts and payments) on current and capital account in which a country is involved over a period of time, say, a year. As the BOP shows the total assets and obligations over a time-period, it always balances.
Barriers to Entry: This refers to the factors which make it disadvantageous for new entrants to enter an industry as compared with the firms already established within the industry.
Better Compliance: Obeying or complying with the Government regulation. It is referred to usually in case of payment of taxes and dues to the Government.
Bilateral Trade Agreements: The agreements relating to exchange of commodities or services between two countries.
Brundtland Commission: A Commission established by United Nations Organization in 1983 to study the world’s environmental problems and propose agenda for addressing them. It came out with a report. The definition provided by the Commission for the term, ‘sustainable development’, is very popular and widely cited all over the world.
Budgetary Deficit: A situation when the government’s income and tax receipts fail to cover its expenditures.
Bureau of Energy Efficiency (BEE): It is a government organization that aims to develop policies and strategies with a thrust on self regulation and market principles. It promotes energy conservation in different sectors of the economy and undertakes measures against the wasteful uses of electricity.
Business Process Outsourcing (BPO): Outsourcing of business processes (activities constituting a service) by companies to other companies. This term is frequently associated with outsourcing of such activities (e.g. receiving and making calls on behalf of other companies popularly known as call centres), by foreign companies to Indian companies in the field of IT-enabled services.
Carrying Capacity: It is the measure of habitat to indefinitely sustain a population at a particular density. A more technical definition for carrying capacity is the largest size of a density-dependent population for which the population growth rate is zero. Hence, below carrying capacity, populations will tend to increase, while they will decrease above carrying capacity. Population size decreases above carrying capacity due to either reduced survivorship (e.g. due to insufficient space or food) or reproductive success (e.g. due to insufficient food, or behavioural interactions), or both. The carrying capacity of an environment will vary for different species in different habitats, and can change over time due to a variety factors, including trends in food availability, environmental conditions and space.
Cascading Effect: When tax imposition leads to a disproportionate rise in prices, i.e. by an extent more than the rise in the tax, it is known as cascading effect.
Cash Reserve Ratio (CRR): A proportion of the total deposits and reserves of the commercial banks that is to be kept with the central bank (RBI) in liquid form. It is used as a measure of control of RBI over the commercial banks.
Casual Wage Labourer: A person, who is casually engaged in others’ farm or non-farm enterprises and, in return, receives wages according to the terms of the daily or periodic work contract.
Colonialism: The practice of acquiring colonies by conquest or other means and making them dependent. It also means extending power, control or rule by a country over the political and economic life of areas outside its borders. The main feature of colonialism is exploitation.
Commercialisation of Agriculture: It implies production of crops for the market rather than for self-consumption i.e. family consumption. During the British rule, the commercialisation of agriculture acquired a different meaning—it became basically commercialisation of crops. The British started offering higher price to farmers for producing cash crops rather than for food crops. They used these cash crops as raw materials for industries in Britain.
Communes: Known as people’s communes, or Renmin Gongshe in China, was formerly the highest of three administrative levels in rural areas in the period from 1958 to 1982-85, when they were replaced by townships. Communes, the largest collective units, were divided in turn into production brigades and production teams. The communes had governmental, political, and economic functions.
Consumption Basket: Group of goods and services consumed by a household. In order to estimate the consumption pattern of people, statistical agencies identify such items. For instance NSSO has indentified 19 groups of items in the consumption basket. Some of them are (i) cereals (ii) pulses (iii) milk and milk products (iv) edible oil (v) vegetables (vi) fuel and light and (vii) clothing.
Default: Failure to make repayment of the principal and interest on a debt e.g. sovereign debt (loan obtained by the government) to the lenders, say, international financial institutions, on the scheduled date, causing loss of credibility as a debtor.
Deficit Financing: A situation in which the government borrows money from the internal, external and prints notes (by the RBI) factors to run the economy.
Demographic Transition: It is a concept developed by demographer Frank Note stein in 1945 to describe the typical pattern of falling death and birth rates in response to better living conditions associated with economic development. Note stein identified three phases of demographic transition, pre-industrial, developing and modern industrialised societies. Later another phase, post-industrial was also included.
De-reservation: Allowing an individual or group of enterprises to produce goods and services which were hitherto produced by a particular individual or group of enterprises. In India, it refers to allowing large-scale industries to produce goods and services which were produced only by the small-scale industries.
Devaluation: A fall in the external value of domestic currency while internal value remains unchanged.
Disinvestment: A deliberate sale of a part of the capital stock of a company to raise resources and change the equity and/or management structure of a company.
Employers: Those self-employed workers who by and large, run their enterprises by hiring labourers.
Enterprise: An undertaking owned and operated by an individual or by group of individuals to produce and/or distribute goods and/or services mainly for the purpose of sale, whether fully or partly. Equities: Shares in the paid up capital or stock of a company whose holders are considered as owners of the company with voting rights and dividends in the profit.
Establishment: An enterprise which has got at least one hired worker for major part of the period of operation in a year.
European Union: It is a union of twenty-five independent states founded to enhance political, economic and social cooperation within the European continent. The member countries of European Union are Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom, Malta, Poland, Slovakia and Slovenia.
Export Duties: Taxes imposed on goods exported from a country.
Export Promotion: A set of measures (including fiscal and commercial support measures and steps aimed at removal of trade barriers) taken by a government to promote the export of goods with a view to achieve higher economic growth and accumulation of foreign exchange earnings.
Export-Import Policy: The economic policies of the government relating to its exports and imports.
Family labour/Worker: A member who works without receiving wages in cash or in kind in a farm, an industry, business or trade conducted by the members of the family.
Financial Institutions: Institutions that engage in mobilisation and allocation of savings. They include commercial banks, cooperative banks, developmental banks and investment institutions.
Fiscal Management: The use of taxation and government expenditure to regulate the economic activities.
Fiscal Policy: All the planned actions of a government in mobilising financial resources for meeting its expenditure and regulating the economic activities in a country.
Foreign Direct Investment: Investment of foreign assets into domestic structures, equipment and organisations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially ‘hot money’ which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly.
Foreign Exchange: Exchange of a Currency or bonds with currency of other country.
Foreign Exchange Markets: A market in which currencies are bought and sold at rates of exchange fixed now, for delivery at specified dates in the future.
Foreign Institutional Investment: Foreign investments which come in the form of stocks, bonds, or other financial assets. This form of investment does not entail active management or control over the firms or investors. Foreign Institutional Investors (FIIs): Banking and non-banking financial institutions of foreign origin e.g. commercial banks, investment banks, mutual funds, pension funds or other such institutional investors (as distinct from the domestic financial institutions investing) whose investment in stocks and bonds in the country through stock markets have significant influence.
Formal Sector Establishments: All the public sector establishments and those private sector establishments which employ 10 or more hired workers.
G-20: Group of developing countries established to focus on issues relating to trade and agriculture in the World Trade Organisation. The group includes Argentina, Bolivia, Brazil, Chile, China, Cuba, Egypt, Guatemala, India, Indonesia, Mexico, Nigeria, Pakistan, Paraguay, Philippines, South Africa, Thailand, Tanzania, Venezuela, and Zimbabwe.
G-8: The Group of Eight (G-8) consists of Canada, France, Germany, Italy, Japan, the United Kingdom of Great Britain and Northern Ireland, the United States of America, and Russian Federation. The hallmark of the G-8 is an annual economic and political summit meeting of the heads of government with international officials, though there are numerous subsidiary meetings and policy research. The Presidency of the group rotates every year. For the year 2006 it was held by Russia.
Gratuity: An amount of money given by the employer to the employee at the time of retirement for services rendered by the employee.