Big Words
Home Preface Contents Chapter 1 Chapter 2 Chapter 3A Chapter 3B Chapter 3C Chapter 4 Chapter 5 Big Words Abbreviations Questions Acknowledgements Links


What the big words mean

Macroeconomics is the study of the big picture of the economy ie of how wealth is created and distributed. It can be about a particular country or about the world as a whole and of how individual countries fit into the global picture. There are many ongoing macroeconomic debates eg
bulletThe rich are getting richer and the poor are getting poorer. What can we do about this? 
bulletTo what extent should governments intervene in the operation of the 'free' market? 
bulletGiven the fact of pollution and the destruction of the environment, is unrestricted economic growth either desirable or possible?

Macroeconomic Stability is a result of having fiscal (tax), monetary and exchange rate policies aimed at hitting key macroeconomic targets such as economic growth, inflation, external debt and net international reserves.

Microeconomics is the study of how particular industries, businesses or households work.

Gross Domestic Product (GDP) is a measure of the total amount of wealth created in a country over a given period of time ie the total value of all the goods and services created and exchanged for money. If the total for this year is 1% higher than for last year then the growth in GDP is 1%. But the GDP is famous for ignoring a lot of valuable work that could be included - for example running a household and family by cooking and fetching fuel and water, and also people building their own houses from local materials and growing food for their own use.

Gross National Product (GNP) is the same sort of thing as GDP but includes imports and exports. 

Real Growth: For both GDP and GNP, if the measured growth is 7% per year but inflation has been 5% per year then the 'real growth' will have been only 2% per year.

Inflation: a measure of how much prices rise between one year and the next - often based on the idea of filling an average shopping basket 

Social Capital is the 'glue' that holds families, groups and society together. It refers to the shared beliefs, customs, and habits that help people work together effectively in formal and informal groups. It can apply at the village level but also at the regional, national and international levels. 

Civil Society Organisations include formal organisations that are registered by Government, and many kinds of informal organisations. They include charity organisations, religious institutions, activist groups, pressure groups, academia, and special interest groups such as trade unions and student movements. Informal organisations include Upata groups, mutual aid groups, ethnic-based welfare societies, football clubs organised by young men and netball clubs organised by young women.

Pro-poor budgeting (and expenditure monitoring). Money is set aside in the budget for programmes which are intended to benefit poor people. But this money has first to pass through the Treasury, the relevant Ministry, the Regional and Council authorities and the service units (eg schools and hospitals) before the poor people will feel the benefit. By monitoring the process carefully it should be possible to make it more efficient.

Public Expenditure Review the PER team meets once every two weeks to study the details of how the Government is collecting and spending its budgeted money. The team, set up in 1997, includes the key Government officials and representatives from the business community, civil society organisations and foreign donor organisations.

Government Budgets: The government is like a household that has to keep a balance between the money that comes in and the money that goes out. When there is not a lot coming in the government has to decide what to spend it on and what not to spend it on. The process of gathering this information and making decisions is called Budgeting.

Sources of government income
bulletDirect Taxes eg income tax, property tax, 
bulletIndirect Taxes eg customs and excise duties, sales tax
bulletNon-tax revenue eg licences and fees
bulletLoans eg from the International Monetary Fund (IMF) and the World Bank
bulletGrants & Donations eg from other governments and from NGOs

Raising taxes is seldom popular and some kinds of tax are harder on poor people than on rich people. Loans are useful for filling short term gaps, and for getting new businesses started, but they have to be repaid. Grants and Donations are very welcome but we cannot expect them to continue forever. 

Personal Emoluments (PE) and Other Charges (OC): a Ministry will spend part of its budget on salaries (personal emoluments) and part on doing the work for which it exists (other charges). As part of the PRSP, the Government will increase the amount of the budget set aside for 'other charges' - for example, between 1999/2000 and 2002/2003, from 2 to 3.8 per cent for basic education and from 2.1 to 3.8 per cent for primary health.



Back Home Next