Glossary of Development Terms


December 7, 2009

Here is a list of various development terms that arise in our work at RESULTS. Terms under other topics are defined in the glossary, or visit Background Information on the Legislative Process.

 

Budget Ceilings

Child and Maternal Health — see Child Survival and Health Programs Fund (CSH)

Child Survival

Education for All

Extreme Poverty

Microcredit/Microfinance

Microenterprise

Microcredit Summit Campaign

Millennium Development Goals (MDGs)

Muhammad Yunus — see Grameen Bank and Muhammad Yunus

Official Development Assistance

Poverty

Poverty Measurement Tools

Purchasing Power Parity (PPP)

School/User Fees

Subsidy

Structural Adjustment Programs (SAPs)

Budget Ceilings

Budget ceilings are limits placed on a country’s budget, imposed by the International Monetary Fund (IMF). The International Monetary Fund (IMF) has the ability to give the proverbial “stamp of approval” to countries based on their economic policies, which is essential to any country looking to get loans or grants from the World Bank, other international and regional development banks, or rich nations. In order for countries to get this stamp of approval, they must fit a variety of economic and political standards set by the IMF, including (but not limited to) limits on inflation and budget deficit. The IMF has set targets for reducing inflation and paying down the fiscal deficit of the countries in which it works, which forces countries to put limits on their budgets.

Budget ceilings have been found to be a problem in many countries of the Global South because the ceilings are too low to allow adequate spending on health care infrastructure, health supplies, education, water, sanitation, agricultural infrastructure, and other basic needs; this inhibits the countries from achieving long term economic growth.

Because these targets are so much lower than many economists outside of the IMF believe they need to be, the budget ceilings are also much lower than they need to be. The result is that countries aren’t able to adequately address HIV/AIDS and other health and human rights crises in their countries. If they do exceed their budget ceilings, they risk losing the IMF’s approval and, as a result, any hope of getting loans or grants from most international lenders/donors. The IMF has shown increasing flexibility in some countries in recent years but continues to apply excessively tight monetary policies in many countries with severe HIV/AIDS epidemics.

See Budget Ceilings and Impact on Poor Countries to learn more.

Child Survival

Child Survival is the provision of basic health care in order to prevent child deaths. Actions undertaken by organizations fighting for child survival include routine immunizations, the promotion of breastfeeding, vitamin A supplements, newborn care, and the prevention and treatment of potentially fatal childhood diseases, including diarrhia, malaria, and pneumonia. RESULTS is a partner in the U.S. Child Survival Coalition.

Read about the Child Survival and Health Programs Fund (CSH), which is the United States government’s account that funds child survival programs. The Health Terms page also describes the diseases that cause childhood deaths.

Education for All

“Education for All” (EFA) is a global commitment to provide quality basic education for all children. It was launched at the World Conference on Education for All in 1990, with the goal of universalizing primary education and massively reducing illiteracy. In 2000, the international community reaffirmed these goals by adopting the Millennium Development Goals (MDGs), a set of internationally agreed-upon targets to reduce poverty and hunger by 2015. The MDGs underscored the education for all movement as two of the MDGs specifically address education goals: MDG #1 focuses on achieving universal primary education, and MDG #2 aims to reduce the gender gap at all levels of education. However, despite all the promises made by the United Nations, nearly 90 million children still do not have access to a primary school education. While there have been successes stories and improvements in access since 1998, overall progress is too slow and uneven, and thus a greater concerted effort is needed to meet the Millennium Development Goals by 2015.

Within this overall goal of EFA, our advocacy is focused upon the abolition of school fees as the necessary first step to a free public primary school education for all children. See the links at the top of the Education for All page to read more about school fees and the work of RESULTS.

Extreme Poverty

Extreme poverty is defined as those individuals living on less than $1 a day (adjusted for Purchasing Power Parity). This level has been defined by the World Bank, which estimates that 1.1 billion people are currently living in extreme poverty, the largest number of whom live in sub-Saharan Africa.

Microcredit/Microfinance

Microcredit or microfinance is the process of extending small loans (generally around $50 to $150) and other financial and business services to very poor people, so that they can start up or expand tiny businesses, thus allowing them to care for themselves and their families. In many developing countries, the self-employed comprise more than 50 percent of the labor force, and many are forced to rely on loan sharks who charge exorbitant interest rates. Microcredit or microfinance programs, on the other hand, provide reasonable interest rates to their clients. In most cases, programs also offer a combination of services and resources to their clients including savings facilities, health and literacy training, networking, and peer support. In this way, microcredit allows families to work to end their own poverty — with dignity.

Microcredit programs around the world, using a variety of models, have shown that poor people achieve strong repayment records — often higher than those of conventional borrowers — between 95 and 98 percent. Repayment rates are high because, through a system of peer support and pressure used by many programs, borrowers are responsible for each others’ loans. Many microcredit institutions focus their programs upon women, whose use of the loans has a greater tendency to benefit the whole family than do loans to men. Microcredit was pioneered by Muhammad Yunus and his Grameen Bank. See the Microcredit page for more information, including RESULTS’ 2007 Legislative Campaign Goals.

Microenterprise

The U.S. government defines a “microenterprise” as a firm of 10 or fewer employees (including unpaid family workers) that is owned and operated by someone who is poor. Microenterprise development programs provide small loans to poor entrepreneurs in order to help their small, locally-owned businesses grow and ultimately succeed. Many of these types of programs also include such services as basic business training or financial planning, and some include financial services such as savings and insurance.

Microcredit Summit Campaign

The first Microcredit Summit, held February 2–4, 1997, gathered more than 2,900 people from 137 countries in Washington, DC. They launched a nine-year campaign to reach 100 million of the world’s poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the year 2005. That goal was very nearly reached and in November of 2006 the Campaign was re-launched to 2015 with two new goals:

  1. To ensure that 175 million of the world’s poorest families, especially the women of those families, are receiving credit for self-employment and other financial and business services by the end of 2015.
  2. To ensure that 100 million families rise above the US$1 a day threshold adjusted for purchasing power parity (PPP), between 1990 and 2015.

The Campaign brings together microcredit practitioners, advocates, educational institutions, donor agencies, international financial institutions (IFIs), non-governmental organizations (NGOs), and others involved with microcredit to promote best practices in the field, to stimulate the interchanging of knowledge, and to work toward reaching our goals.

The Microcredit Summit Campaign is a project of the RESULTS Educational Fund.

For more, visit www.microcreditsummit.org

Millennium Development Goals (MDGs)

Established at the United Nations Millennium Summit in September of 2000, these eight goals were agreed upon by 189 of the world’s governments and call for significant progress in cutting all aspects of extreme poverty by the year 2015. The goals include the following:

  • Halve the proportion of people living on less than a dollar a day and those who suffer from hunger.
  • Ensure that all boys and girls complete primary school.
  • Eliminate gender disparities in primary and secondary education preferably by 2005, and at all levels by 2015.
  • Reduce by two-thirds the mortality rate among children under five.
  • Reduce by three quarters the maternal mortality rate.
  • Halt and begin to reverse the spread of HIV/AIDS. Halt and begin to reverse the incidence of malaria and other major diseases.
  • Integrate the principles of sustainable development into country policies and programs; reverse loss of environmental resources. Reduce by half the proportion of people without sustainable access to safe drinking water. Achieve significant improvement in lives of at least 100 million slum dwellers, by 2020.
  • Develop a global partnership for development.

In the 2005 World Summit in New York City, leaders from over 170 nations discussed the progress made on the MDGs and recommitted the global community to achieving these goals by 2015. www.un.org/millenniumgoals/

Official Development Assistance (ODA)

Official Development Assistance (ODA) refers to the monetary aid given to support the development and reduction of poverty in developing countries. This aid can come from industrialized governments or from international organizations like the World Bank. Unlike humanitarian aid, development aid focuses on long-term solutions to a country’s problems rather than short-term emergency support. See the Development Assistance Account to read about the United States’ Development Aid program.

Poverty

According to the World Bank, poverty can be defined as the state of living on less than $2 a day. There are many other definitions of poverty, such as a lack of basic necessities like food, clothing, water, and shelter. Statistical ways of measuring poverty include the following:

Relative Poverty Measurement: this method ranks the entire population of a country according to income per capita and the bottom percentage (determined specifically by each country) is considered poor. Measuring poverty under this system has its disadvantages when comparing poverty levels of different countries throughout the world. For example, the bottom 10 percent of an industrialized country is not going to be living in the same conditions as the bottom 10 percent of a developing country.

Another consideration when determining these statistics is that of income versus consumption. While income measures the amount of money that a person makes, consumption refers to the monetary value of the goods that the person consumes. Income is a factor that determines consumption rates.

Absolute Poverty Measurement: This measurement system provides the most common definition of global poverty. It is the same system described above as used by the World Bank, which sets the poverty line at $2 a day or less (with extreme poverty levels set at less than $1 a day). According to Causes of Poverty, almost half the world lives on less than $2 a day — nearly 3 billion people.

Those countries that are more developed set their poverty lines higher, understandably. In 2005, the poverty line for people who were single was set at $26.19 in the United States.

(Sources: a Dollar a Day — Finding Solutions to Poverty: http://library.thinkquest.org/05aug/00282/other_glossary.htm, Causes of Poverty: http://www.globalissues.org/TradeRelated/Poverty.asp)

Poverty Measurement Tools

The Microenterprise Results and Accountability Act of 2004 required among other things that USAID develop and certify at least two poverty assessment tools to ensure that at least half of its funds for microcredit reach the very poor — those living on less than $1 per day or those living in the bottom 50 percent below their country’s poverty line. The date set by the law required that these tools be certified by October of 2006. However, USAID found that it could not certify certain tools to use for all countries; rather, it must develop poverty measurement tools that are slightly adjusted to the situation of each country. Thus, a team based at the IRIS Center at the University of Maryland has been working with USAID’s Microenterprise Development division, and so far, twelve country-specific poverty measurement tools have been developed. Visit www.povertytools.org to view these tools and to see how they are adjusted to each country.

Privatization

Privatization is the sale of assets by the public sector (the government) to the private sector (businesses). Governments often privatize services such as banking, electric power provision, oil and gas production, and transportation. In general, they do so to relinquish responsibility of enterprises that are not benefiting the government. Those in favor of privatization argue that the private sector can operate enterprises more efficiently thanks to free market competition, whereby lower prices, better quality, and a greater selection of offerings among other benefits may be achieved. However, those against privatization believe that public services that are privatized will be out of the hands of the government, which may result in higher prices for these services or a disregard for public social objectives, such as improving a community’s access to sanitation services. The practice of privatization emerged in the 1980s in developed countries but has now spread to developing countries as well.

Purchasing Power Parity (PPP)

“Purchasing Power Parity” is a term used when discussing the poverty line. A dollar in a developing country such as Sierra Leone will buy much more than would a dollar in, say, Japan. Thus, slight adjustments must be made to the poverty line, according to purchasing power parity, to provide a more accurate comparison. These adjustments take into account differences in standards of living as well as pricing of goods.

(Source: a Dollar a Day — Finding Solutions to Poverty http://library.thinkquest.org/05aug/00282/other_glossary.htm)

School/User Fees

In many countries, public primary schools require fees, most of which were originally implemented in the 1980s and 1990s at the behest of the World Bank and International Monetary Fund. These international organizations, as part of structural adjustment programs, imposed economic policy reforms on developing countries that were aimed to ensure debt repayment and economic restructuring. However, school fees (as well as other imposed policies such as health user fees and budget ceilings) reduced governments’ ability to provide basic resources for their people and limited access to basic education for the poor. Fees include not only the price of tuition, but also indirect costs such as textbooks, compulsory uniforms, transportation, and other expenses.

Abolishing school fees is absolutely necessary to increase enrollments and ensure gender parity. Removing this barrier demonstrates a commitment to giving children access to an education and thus a hope for a brighter future.

See the Education for All page to read more.

Subsidy

A subsidy refers to financial aid that the government gives either to individuals or to groups that will ultimately support an enterprise that is considered to be in the interest of the public. The government provides this assistance in the form of a grant, a tax break, or a trade barrier. Often, an important public service, such as a transit company, will be given a subsidy by the government as a grant; this grant is necessary as the transit company needs to continue its operations but may not otherwise be attaining the funds it needs. Other enterprises and businesses that also generally receive subsidies are agriculture, housing and regional development, business expansion, as well as medical and educational institutions. At certain times, countries have granted subsidies to other countries in need in order to help the country pursue its war effort or stabilize its economy.

(Source: Columbia Encyclopedia)

Structural Adjustment Programs (SAPs)

“Structural adjustment” is the name given to a set of “free market” economic policy reforms imposed on developing countries by the World Bank and International Monetary Fund (IMF) as a condition for the receipt of loans. They were developed in the early 1980s as a means of gaining stronger influence over the economies of debt-strapped governments in the Global South. To ensure a continued inflow of funds, countries already devastated by debt obligations have little choice but to adhere to conditions mandated by the World Bank and IMF. Most donor countries, including Canada, condition their bilateral assistance upon a country’s adoption of structural adjustment programs. SAPs are designed to improve a country’s foreign investment climate by eliminating trade and investment regulations, to boost foreign exchange earnings by promoting exports, and to reduce government deficits through cuts in spending. They also encourage greater privatization and the government’s adoption of user fees (that charge for the use of services provided by the government) such as school fees.

Please see our Structural Adjustment Programs page for more details about the measures imposed under SAPs, the need for them, and the problem with them.

Explore Related Articles

JOIN US

Stay Connected

This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
By continuing to use this site, you are consenting to our use of cookies.