Globalization and its Discontents | Study Guide

Joseph Stiglitz

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Globalization and its Discontents | Glossary


austerity: reduction or elimination of government expenditure on social services or for the public good in order to reduce the government budget

capital flight: the process of citizens of a nation moving their money out of their country's banks and placing it in safer foreign banks

capital market: a global free market in which financial services and currencies are traded

conditionality: strictures a borrowing nation must follow before securing a loan from the IMF

contagion: the spread of an economic downturn from one country to the next

crony capitalism: an economic system in which government decisions favor those with close ties to government officials

dumping: selling a product abroad that is priced below its cost of production

exchange rate: the fluctuating value of a currency as it relates to other currencies

foreign direct investment: investments by foreign firms and corporations in a developing nation's industrial and other sectors

hot money: money used to speculate on the value of a foreign currency, which is often bought and then quickly sold for a profit

liberalization: the removal of government interference in trade and financial markets and the opening up of markets so that they become free markets

market fundamentalism: the belief that markets always work perfectly and that supply always equals demand

moral hazard: the absence of an incentive to guard against investment risk because it is protected from consequences, for example, by insurance

one-size-fits-all policy: IMF view that the imposition of the same market fundamentalism is suitable to every developing nation

privatization: converting state-run industries, firms, and services into private ones

rent seeking: how special interests use tariffs and other protectionist measures to increase their incomes at the expense of others

sequence and pacing: the order in which economic changes are made and the rate at which these changes are implemented

structural adjustment loan: program designed to help countries adjust to and survive crises

trade liberalization: the lowering of tariffs and elimination of other protectionist measures

transition economy: an economy that is changing from noncapitalist, as in communist China, to a capitalist economy

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