1. Redistributionrefers to the transfer of economic resources from the wealthy to thepoor. Developed countries utilize neutral forms of wealthredistribution while developing nations utilize non-neutral means.

2. Innovationrefers to new techniques that are used to increase output withoutincreasing inputs. It contributes to economic development in terms oftechnology, techniques of production, and worker training.

3. Prosperity v.peace refers to the conflict that arises between the pursuit ofpeaceful relations at the expense of economic development. Theconcept is fundamental to economic policies since it focuses on theunderlying causes of conflict.

4. Correlationrefers to when two activities occur together. The concept ofcorrelation is fundamental since it helps a country to determine theimpact of adopting particular policies.

5. Amultinational corporation refers to an international organizationthat establishes subsidiaries in foreign countries. Governmentpolicies regarding corporate tax and other factors determine the easeof doing business in a particular country. Therefore, MNCs establishoperations in countries where investment incentives exist.

Essay Question 1

Countries move from Phase A to Phase B and Phase C by developinginstitutions that better protect against natural and human risk.Phase A countries are unable to unilaterally arm and survive. Phase Ato B movement is only possible once socioeconomic change gives aleader ability and incentive to replace deterrence with centralizedviolence, and entice/force warring tribes to join. Societies in PhaseB are constrained in manner very analogous to constraints of phase A.Just as with transition from Phase A to B, transition from Phase B toC cannot occur unless socioeconomic change alters the incentives ofthe players.