Adjustment loans: loans given by the World Bank or IMF to countries to restructure their debt. These loans have strict financial and budgetary obligations and require the receiving country to open up their economy to private investment.

Arbitration: a process by which parties resolve their conflicts outside of a formal courtroom and agree for a 3rd party to help resolve the dispute amongst the parties

Balance of payments: The Balance of Payments (BOP) is a statistical statement that summarizes, for a specific period (typically a year or quarter), the economic transactions of an economy with the rest of the world.

Bond market: a financial market where participants buy and sell debt securities. Debt is owed money. Securities are instruments that have a financial value and are issued by companies, governments, and other entities.

Bretton Woods: Toward the end of the Second World War, in July 1944, representatives of the United States, Great Britain, France, Russia, and 40 other countries met at Bretton Woods, a resort in New Hampshire, to lay the foundation for the post-war international financial order. Such a new system, they hoped, would prevent another worldwide economic cataclysm, like the Great Depression, which had destabilized Europe and the United States in the 1930s and had contributed to the rise of Fascism and the war. Therefore, the United Nations Monetary and Financial Conference, as the Bretton Woods conference was officially called, created the International Monetary Fund (the IMF) and the World Bank to prevent economic crises and to rebuild economies shattered by the war.

Capital markets: A market where companies, governments, or other institutions can go and raise money (capital) for their needs. Two types of capital are stocks and bondsA certificate issued by a government or company representing a promise by the bond issuer to pay the bondholder interest in addition to the principal amount of the bond after a specified period of time. For example, a 10-year bond purchased today costs . When you “redeem” or cash in the bond after ten years, the issuer repays the principal plus interest at a rate established when the bond was issued. (debt), hence two well-known capital markets are the stock market and the bond market.

Commodity: an item than has a value and can be traded; it is the same no matter where you buy and sell it. Examples of basic commodities include: crude oilOil that has been extracted from the ground but not yet refined into usable form., corn, ethanolA type of alcohol that can serve as the basis for fuel., sugar, soy beans, coffee, rice, wheat, gold, and silver.

Conditionality: “Economic policies or structural reforms that [borrowing] members agree to follow as a condition for the use of IMF and World Bank resources [loans] often called performance criteria or benchmarks.” http://www.brettonwoodsproject.org/glossary/index.shtml

Contingent Credit Lines: “IMF credit line established after the financial crisis in 1997-1999. Countries are required to satisfy certain conditions in order to join the CCL to provide emergency assistance.” http://www.brettonwoodsproject.org/glossary/index.shtml

Deregulation: a process in which governments remove, reduce, or simplify restrictions placed on businesses and individuals to make it easier and more efficient to do business in that country

Developing countries: The World Bank classifies countries according to their Gross National Income (GNI) per capitaPer unit of population. Per capita energy consumption, for example, is the amount of energy that is used on average by each person in a given country. as either low income, middle income, or high income. Low income and middle income economies are referred to as developing economies.

Exchange rates: is equal to how much domestic currency is equal to one unit of foreign currency

Fiscal planning: planning financial matters and/or a government budget

Fiscal austerity: government policies that cut budgets and reduce government spending

Fiscal discipline: careful management of a government’s budget

Foreign direct investmentThis category refers to international investment in which the investor obtains a lasting interest in an enterprise in another country. Most concretely, it may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants or equipment.: This category refers to international investment in which the investor obtains a lasting interest in an enterprise in another country. Most concretely, it may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants or equipment.

Float: in the economic sense, to float a currency means that a country’s central bank does not interfere with the value of the currency

Free trade: goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item. are bought and sold according to supply and demand (instead of governments determining the price of goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item.)

Heavily Indebted Poor Countries (HIPC) Initiative: Arrangement for reducing debt to institutions, such as the World Bank, debt to other countries, and debt in the private sector for the poorest, most indebted countries.

Industrialized nations: a synonym for developed countries, meaning the country has a high per capitaPer unit of population. Per capita energy consumption, for example, is the amount of energy that is used on average by each person in a given country. income, high GDP, and developed industries

International Bank for Reconstruction and Development (IBRD): the World Bank. It aims to reduce poverty in middle-income and creditworthy poorer countries by promoting sustainable developmentdevelopment that meets the needs of the present without compromising the ability of future generations to meet their own needs., through loans, guarantees, and non-lending-including analytical and advisory-services.

International Center for Settlement of Investment Disputes (ICSID): The ICSID provides arbitration services, which are entered into on a voluntary basis, but once two parties agree to submit issue resolution to ICSID, they are required to follow ICSID procedures until the verdict is rendered. Furthermore, all member countries of ICSID are bound to recognize and enforce the rulings that are made.

International Development Association (IDA): The IDA was organized by the World Bank in 1960 to provide additional financial assistance to the poorest developing countries. In order to provide resources on better terms than those that are available from the World Bank, the IDA provides special “credits.” These credits are zero-interest loans that have longer payment periods of 35 to 40 years and a grace period of ten years. These types of loans are offered to the poorest countries to help them pursue their development goals, sometimes despite disease and conflict.

International Finance Corporation (IFC): The IFC was established in 1956 and is now the largest public source of financial investment for private sector projects in developing countries.
Inflation: a sustained increase of general prices for good s and services in a specific economy over a specific period of time.

Inflation: a sustained increase of general prices for goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item. in a specific economy over a specific period of time.

Liberalization: relaxing of government restrictions, usually in social and economic policy. It is not the same as privatization, as a market can be opened to competition, but still includes government-owned companies.

Macroeconomic: the part of economics dealing with the performance, structure, and behavior of national economies as whole. For example, macroeconomics includes studying national income, unemployment, inflation, and international trade.

Market-determined: the market decides vs. a government dictating the price or another feature

Market fundamentalism: belief that free markets (free of government interference) provide the best outcome and that government interference decreases social well-being

Monetary: refers to government or central bank management of the supply of money or trading in foreign currencies

MicrocreditA form of microfinance in which small loans are given to impoverished entrepreneurs who would not otherwise be able to secure loans because of unemployment, lack of collateral or lack of credit history.: the giving of very small loans to companies or individuals who cannot go to traditional banks to receive a loan

Multilateralmultiple countries working together to on a specific issue: multiple countries working together to on a specific issue

Multilateralmultiple countries working together to on a specific issue Investment Guarantee Agency (MIGA): MIGA created in 1988 to provide risk-balancing insurance services to foreign direct investmentThis category refers to international investment in which the investor obtains a lasting interest in an enterprise in another country. Most concretely, it may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants or equipment. projects in developing countries. The typical service offered by MIGA is political risk insurance, which insulates investors against government expropriations, consequences of conflict, terrorism, and similar threats. This allows both investors and lenders to undertake commitments to such projects without the overwhelming downside risk that would otherwise exist. It also enables developing countries to attract and maintain private investment in their countries, which is essential to sustained development.

Organization for Economic Cooperation and DevelopmentA group of the world’s most advanced and wealthiest economies that is both a forum for and an active participant in debates about international economic policies. It was established in 1961 and now has 34 members, including the United States, Canada, Mexico, Japan, South Korea, and most members of the European Union. (OECDA group of the world’s most advanced and wealthiest economies that is both a forum for and an active participant in debates about international economic policies. It was established in 1961 and now has 34 members, including the United States, Canada, Mexico, Japan, South Korea, and most members of the European Union.): A group of the world’s most advanced and wealthiest economies that is both a forum for and an active participant in debates about international economic policies. It was established in 1961 and now has 30 members, including the United States, Canada, Mexico, Japan, South Korea, and most members of the European Union.

Pegged: in financial terms, it occurs when a currency’s value is tied to another country’s currency value or to something of value (such as gold)

Poverty reduction: This strategy emphasizes getting countries out of what the World Bank calls “poverty traps,” such as low productivity, poor infrastructure, and weak public health and education systems.

Poverty Reduction and Growth Facility: developed by the IMF to make poverty reduction and growth more central to its lending operations to the poorest countries

Political risk insurance: a type of insurance that can be taken out by companies against political risk, such as revolutions, political violence, coups, civil unrest, terrorism, or other political conditions that result in loss

Privatization: process where government-owned institutions and/or assets are sold to companies or individuals

Sovereigntycomplete and exclusive control of all the people and property within a territory: complete and exclusive control of all the people and property within a territory

Structural adjustments: reforms that are required by developing country when seeking a loan by the IMF or World Bank, which ensure a free market where goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item. are bought and sold according to supply and demand (instead of governments determining the price of goods and servicesA good is a tangible item that someone has made, mined, or grown. A service is a form of work, assistance, or advice that provides something of value to someone else but does not produce a tangible item.)

Supplemental Reserve Facility: A facility to provide financial assistance for countries experiencing exceptional capital account problems resulting from a sudden and disruptive loss of market confidence. Source: http://www.brettonwoodsproject.org/glossary/item.shtml?x=345131

Sustainable developmentdevelopment that meets the needs of the present without compromising the ability of future generations to meet their own needs.: development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Washington Consensus: phrase coined in 1989 by John Williamson to describe a set of 10 economic policies that are considered the standard reform package promoted by the IMF and World Bank including: 1) fiscal discipline; 2) redirecting public funds towards key growth sectors such as education, health care and infrastructure; 3) tax reform; 4) Market-determined interest rates that are moderate; 5) competitive exchange rates; 6) trade liberalization; 7) liberalization of inward foreign direct investmentThis category refers to international investment in which the investor obtains a lasting interest in an enterprise in another country. Most concretely, it may take the form of buying or constructing a factory in a foreign country or adding improvements to such a facility, in the form of property, plants or equipment.; privatization of state enterprises; 9) deregulation, except for those institutions needed for public safety; and 10) legal security of property rights.

World Trade Organizationan international body dealing with the rules of trade between participating nations (WTOan international body dealing with the rules of trade between participating nations): an international body dealing with the rules of trade between participating nations

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