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Glossary
BRIC economies The acronym stands for Brazil, Russia, India and China, a term coined by investment bank Goldman Sachs to identify the large emerging markets with good growth potential.
current account deficit/surplus The difference between the value of traded goods and services, and portfolio capital, flowing into and out of the country.
first-generation currency crisis The Latin American crisis of 1981–82.
forward guidance Central banks giving guidance as to where interest rates might be in the future.
G7 A group comprising seven of the world’s major economies – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States – formed with the intention of shaping global economic policy.
global financial crisis The failure of many of the world’s leading financial institutions precipitated in 2008 by the collapse of the US sub-prime mortgage market.
gold standard Exchange rate system operational in the nineteenth and early twentieth centuries in which participating countries fixed their currencies to be exchanged for a specified amount of gold.
Great Crash The collapse of the US stock market in October 1929. Also known as the Wall Street Crash.
Great Depression The worldwide economic downturn that followed the Great Crash and lasted for most of the 1930s.
Great Recession The recession that followed the global financial crisis in 2009.
IMF (International Monetary Fund) A Bretton Woods institution focused on global economic stability.
inclusive growth Economic growth that benefits everyone in a society.
laissez-faire Literally ‘let (people) do’. Used to describe a policy of non-intervention by the state or government.
Long Depression The global recession that occurred during the last quarter of the nineteenth century.
macroprudential policy Central bank regulations aiming for financial stability.
median income The level of income of the person at the midpoint of the distribution.
monopoly A firm that has market power in the product market.
monopsony A firm that has market power in the labour market.
OECD (Organisation for Economic Co-operation and Development) A think-tank for advanced economies, based in Paris.
negative interest rates Central banks charging commercial banks for depositing money with them.
purchasing power parity (PPP) A theory of exchange rate determination, which argues that the exchange rate will change so that the price of a particular good or service will be the same regardless of where you buy it.
quantitative easing (QE) Cash injections into the economy by a central bank.
Ricardian equivalence David Ricardo’s theory that rational people know that the government debt will have to be repaid at some point in the form of higher taxes so they save in anticipation and do not increase current consumption that boosts growth.
second-generation currency crisis The collapse of the European exchange rate mechanism (ERM) in 1992.
STEM Science, technology, engineering and mathematics.
third-generation financial and currency crisis The Asian financial crisis of 1997–98.
Wall Street Crash See Great Crash.
World Bank A Bretton Woods institution focused on alleviating poverty.
WTO (World Trade Organization) An intergovernmental organization formed in 1995 that regulates international trade, which was preceded by the General Agreement on Tariffs and Trade (GATT), in force since 1947.
Acknowledgements
I am hugely indebted to Graeme Chamberlin for his steadfast support of this project. His many contributions to the book, including numerous insightful additions, based on his impressive economic knowledge, were invaluable.
I am also extremely grateful to Martin Slater. His encyclopaedic knowledge of economics, and of economists, added so much to the book. He injected colour and helpful historical context, which were greatly appreciated.
This book would not have been possible without the support and encouragement of my brilliant publisher, Daniel Crewe, at Viking. His insightful edits and keen interest have improved the text and he has been a delight to work with throughout. I feel lucky that he came up with the idea for this book that suits my interests so well.
Another key person is my agent, Will Francis, of Janklow and Nesbit UK. He is, simply put, terrific in every respect. I am very fortunate to have him in my corner as a long-standing supporter.
I would like to thank my US publisher, Pronoy Sarkar, at Picador, an imprint of Macmillan. His enthusiasm for this book is infectious! I feel fortunate to have his support and encouragement.
I would also like to acknowledge the many wonderful journalists with whom I have worked over the years. Their dedication to telling stories of relevance to people’s lives made it possible for me to present a wide variety of TV and radio programmes that cover some of the most important economic and business issues of our time. I am delighted to include some of those adventures here.
A special thanks goes to Hannah Ludbrook for her enthusiastic promotion of my book, and to Connor Brown for all of his help throughout the enjoyable process. I also appreciate all of the work of Sarah Scarlett at Penguin Random House, who has looked after the international rights so well. And I thank Trevor Horwood for his diligent copy-editing of the manuscript, as well as Dave Cradduck for his thoughtful compilation of the index. Indeed, a huge thanks goes out to the helpful Ellie Smith and the entire team at Viking/Penguin Random House for their energetic support of this book.
The contributions of my students, colleagues and members of the public are also evident throughout this work, since they have helped me identify the economic issues that matter most. Our interactions in the classroom, at conferences and in public forums have left an indelible imprint on me as to how economics affects our lives. I am immensely grateful to have had so many opportunities to hear and discuss the impact of economic policies.
Finally, I would like to thank all of you – the readers of this book – for being interested in the big economic challenges of our time. It is only through your engagement that we can go about crafting a better economic future for us all.
THE BEGINNING
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First published 2018
Copyright © Linda Yueh, 2018
The moral right of the author has been asserted
Cover design and illustration: David Wardle
ISBN: 978-0-241-97448-3
fn1 The original was: ‘It works in practice, but does it work in theory?’
CHAPTER 11: DOUGLASS NORTH: WHY ARE SO FEW COUNTRIES PROSPEROUS?
fn1 The other sixteen Sustainable Development Goals are: zero hunger; good health and well-being; quality education; gender equality; clean water and sanitation; affordable and clean energy; decent work and economic growth; industry, innovation and infrastructure; reduced inequalities; sustainable cities and communities; responsible consumption and production; climate change; life below water; life on land; peace, justice and strong institutions; partnerships for the goals.