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OCTOBER 25, 2012

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                                                 ECONOMIC TERMINOLOGY- G - H


A basic commodity for which demand rises as prices rise while it falls at lower prices. Giffen observed that as the price of bread rose, the poor using it as their staple diet, could not buy other, costlier food items. So they had to replace it with more bread. Similarly, because bread was the bulk of their spending, they enjoyed this increase in their real income when its price fell. Now they could substitute other, more palatable food for bread.







Fixed-interest government securities. They are called gilt-edged because of the certainty of principal and interest payments in time. The term arises from the gold plating done on the margins of the treasury certificate issued by the treasury. However the Reserve Bank of India now issues such certificates without gold-plating but the name has stuck.  






The geographic spread of industrial and service activities and the cross-border linkages of companies (e.g. through joint ventures and the sharing of assets). Globalization does not always need a physical presence in other countries, or even exports and imports, e.g. activity can be shifted abroad by licensing, which only needs information and finance to cross borders. Although not new, the its pace has accelerated, facilitated by improvements in transport and communications, the promotion of deregulation, the removal of trade restrictions and exchange controls



The logic behind globalization could be lower labour costs and other favourable variables abroad and the bypassing of tariff and non-tariff trade barriers to trade. The evidence so far suggests that all nations participating in the globalization process will gain in the long term.






A pre-mature retirement plan under which an employee is given sufficient money in cash on retirement to let him find another occupation / set up a business. This scheme was a part of the Exit Policy of the government after 1991. This is also referred to as the Voluntary Retirement Scheme (VRS). A separate fund called the National Renewal Fund was constituted to retrain and rehabilitate the workers affected by the VRS.






A barometer of the total flow of goods and services produced by an economy over a period, normally a year. It is obtained by adding up the values of goods and services at market prices. Please note that all intermediate goods are excluded, and only goods used for final consumption or investment goods (capital) are included. This is because the values of intermediate goods are already a part of the prices of the final goods.



The word 'gross' means that no deduction for depreciation is made. Because income from investments and possessions abroad is not included, only the value of the goods and services produced in the country is estimated. Since no adjustment is made for indirect taxes and subsidies, the measure here is often called 'GDP at market prices'.







[Gross Domestic Product]




[the income of domestic residents from investment abroad] – [Income earned in the domestic market by residents abroad]. This net income is also known as Net Factor Income From Abroad.







The unique feature of hedge funds is that they are not open to smaller private investors. Hedge funds take positions in bankrupt or merging companies and on the direction of equity, debt, commodity and currency markets. They use hedging and derivatives frequently.






The funds that flow into a country to take advantage of favourable rates of interest in that country, influencing the balance of payments and strengthening the exchange rate of the recipient country. These funds are highly volatile and are shifted elsewhere when interest rates favour the move.






The United Nations Development Programme (UNDP), in its annual Human Development Report, lists countries in the order of human achievement. Some principal measures used to calculate the comprehensive index, among the 180 + parameters, are --- life expectancy at birth, death rate, adult literacy rate, school attendance rate and Gross Domestic Product per capita in US dollars at purchasing power parity.



As per the latest HDI Report, Luxembourg tops the list of more than 175 countries on the list, followed by Norway and Canada. It also publishes a Gender Development Index, based on the HDI but adjusted for gender inequalities. These indices reflect the concern that the Gross Domestic Product is an inadequate measure of human welfare. There is an alternative proposal for a 'Gross Domestic Happiness’ index, which would cover pollution, public order, good governance, education, inequality, life expectancy, health care and leisure. The expectation is that it would take the government fixation away from GDP growth and re-align it towards taking it as only one of the means to promote human welfare.



Some Indian states, notably Madhya Pradesh and Kerala, following this exercise, have started publishing their own Human Development Indices to reflect comprehensively the level of human welfare. 


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