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Economic History Lecture NEW

The document provides an overview of economic history and systems, describing how economies have evolved from primitive societies based on hunting and gathering to today's more complex systems. It examines the agricultural and industrial revolutions that introduced new technologies and ways of organizing production. In addition, it outlines different economic models like capitalism and socialism and sectors within economies like primary, secondary, and tertiary.

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0% found this document useful (0 votes)
53 views111 pages

Economic History Lecture NEW

The document provides an overview of economic history and systems, describing how economies have evolved from primitive societies based on hunting and gathering to today's more complex systems. It examines the agricultural and industrial revolutions that introduced new technologies and ways of organizing production. In addition, it outlines different economic models like capitalism and socialism and sectors within economies like primary, secondary, and tertiary.

Uploaded by

SOLANA ARCHER
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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ECONOMIC

HISTORY

Janet s. delena, ph. D


College of liberal arts
Department of economics
Describe the picture below
Introduction
•Definitions:
•Definition Of Economy By
John J.Macionis:
• “Economy is the social
institution that organizes a
society’s production,
distribution, and
consumption of goods and
services”.
Introduction
1.Economic institution is also one of
the most basic institutions.
2.Even the primitive societies have
them but of very old and simple
nature.
3.Technology and industry have a role
in developing the economic system in
modern societies
•“It is a social institution
that accomplishes the
goal of producing and
distributing goods and
services with in society
called economic
institution.” (Calholm,
Light & Keller)
“Economic system is a complex of inter-related
institutions through which the economic activity
of man is expressed. Economic activity is the
production and distribution of goods and
services.” (P. Gisbert)
Functions
•International Trade:
Economic Institutions
promote International
Trade and improve
relations between
countries.
•Promote Stability: By
promoting stability, we
can reduce vulnerability
to crisis, encourage
sustained growth, high
living standards, reducing
poverty, adverse
healthcare, lack of food,
unemployment, and
insecurity.
Functions
•Need Satisfaction It is a
major function of
Economic Inst – provides
people with basic needs,
food, healthcare,
livelihood, transportation,
entertainment.
•Income Generation & Employment:
By providing employment, people
have a source of income generation.
This promotes stability and
consequently progress in society.
•Division of Labor: Labor
is divided on basis of
skills and abilities of
people. This allows them
to become expert in
their field, and increases
efficiency. This principle
is now being applied in
Rural areas as well.
•Encourage Business: By giving loans, and
creating business laws, investors can be
attracted to set up new businesses around the
world.
•Reduce Issues:
Economic Institutions
help plan for future
needs, and make
arrangements to
reduce poverty,
illness, hunger, and
illiteracy
•Promote Trade
Economic Inst. Promote
trade, facilitate
transactions and
permit economic
cooperation resulting in
the creation of new
jobs and overall
improvement in
economy &
infrastructure
Economic Institution’s Functions
•Promote Investment:
In a secure
environment, investors
start new projects.
•Innovation and
Invention: Economic
Inst. Promote
technological
innovation, research
and innovations.
•Social Stratification
Economic Inst. Distribute
the resources which
allows society to be
divided into various
classes, such as higher
class, middle class and
lower class with clearly
established boundaries
between
History of Economic
•Primitive Societies:
•- Earliest Record of Economic Systems
• Examples: Cro-Magnon people, Eskimo.
• Lived on hunting and gathering
• Concept of shared property
• Gathered and Stored food (Rich People)
•There is considerable difficulty of
describing any part of ancient activities as
constituting an “economy.” (Elizabeth
Marshall)
History of Economic
Agricultural Revolution:
•- About 5000 years ago, it began
• People settled in communities, began to grow
food and domesticate animals.
• Surplus of food meant people could find other
work. -Agricultural revolution is known for:
• Agricultural technology (tools, etc.)
• Permanent Settlement
• Trade started between communities.
History of Economic
•Industrial Revolution:
• Mid 18th century, England and North America
• Major changes in agriculture, manufacturing,
mining, transportation
• Focus on Experimentation and Invention
• New sources of energy: Manual labor replaced
by Steam Engine
• Steam Engine Used in Factories
James Watt – 1765, Steam Engine
Abraham Darby 1778 – Iron bridge
•Mass production of goods (lot of raw material,
finished product from one factory)
•Division of labor and specialization of work
•Concept of laborers: less important than the
machines
•Child Labor
•Exploitation
•Polluted environment, safety hazard
•Women worked hard for low wages
Major Inventions

1793 – Cotton Gin 1760 – Spinning Jenny


(Eli Whitney) (James Hargreaves)
1879 – Light bulb Robert Fulton,
(Thomas Edison Steam Ship 1807
1876 – Telephone 1892 – Diesel Engine
(Alexander Bell) (Rudolf Diesel)
Post Industrial Societies
System introduced in 1950
• Focus on specific jobs, not labor, and high use of
technology
• Computer has resulted in ‘Information Age’
• Workforce has changed from laborers to machine
operators, technicians, clerks.
• Highly qualified people employed as managers and
supervisors
• Shift from mechanical skills to mental, analytical and
literary skills.
Activity 01: Click the link and view the video
and identify the economic activities.

• https://www.youtube.com/watch?v=P-I4Bay5
SXo
• https://www.youtube.com/watch?v=gxqgm-ru
iW8
Economics Systems : Types
Economic Systems can be divided into:

•Capitalism

•Socialism
Capitalism
•In capitalist economies, there is a high
ownership of wealth producing property, like
factories, land, etc.
•People can take any measures to extract
maximum profit, including price fixing, price
mafia, shortage, etc. Govt regulation of business
causes negative effects including strange
regulations, political pressure, etc.
•Pure Capitalism
proposes ‘free market’
system without any
government rules. Adam
Smith said: “A free
economy governs itself by
invisible hand, it is the
consumers who regulate
the economy and market
by defining their
In this capitalist world,
demand.” we all grow up to die.
Capitalism
•Capitalism is defined as “A type of
economy based on private ownership of
most resources and goods and the
freedom to use them to get the most
profit”.
•Features
•Private Ownership of goods, resources,
property, etc.
•Freedom to obtain maximum profit
System of open markets (anyone can enter)
•Competitive market system
•Govt established rules of business and trade*
•Govt institutions include military, and some
education, and infrastructure development
facilities
Capitalism : Examine USA
•Is USA Capitalist?

•Yes:

•Private ownership of
business
•Free and open market
•Freedom to obtain
maximum profit
•No:

•Govt regulation of business

•Minimum Wage level

•Worker health insurance and

•Safety

•Labour rights
Activity 02
Quiz 01 : Click and View the video.
What is capitalism and why it is
important in a country ?
• https://www.youtube.com/watch?v=B3u4EFT
wprM
Socialism
•Socialism is defined as “An economy that is
based on government ownership, rather than
individual ownership, worker controlled
government and equal distribution of goods and
services”
•Features

•Public/Govt Ownership of resources,


property, etc.
•Govt controls all manufacturing
(mean of production)
•Markets have restricted access
( ban on imports )
• Govt controls all establishments,
include military, education, healthcare, etc
Socialism
Private ownership rights are limited, there is
collective ownership.
•People must pursue collective goals not
personal goals (E.g feed the country, not buy
mobile phone)
•Economy and trade are completely under the
government.
•Due to limited choice, there is little or no
advertising.
Aims of a Good Economic System:
Economic growth
Socio-economic development
Maximum Possible employment
Prices Stability
Activity 03
Quiz 02 : Click and View the video.
Identify the differences of Capitalism and Socialism and give its important each.

• https://www.youtube.com/watch?v=Fdfru9N
HGvE
Factors affecting Production of Goods

•Land / Natural Resources


•Labour / Workforce
•Capital: manufactured stock of tools, machines,
factories, offices, roads and other resources used in
the production of goods and services.
•Market: occurs whenever buyers and sellers are in
contact with each other

Activity 04: Click and Review the video below.


https://www.youtube.com/watch?v=VZD7dTSHmIo
Types of Market Structure
•Oligopoly: market structure
where there is a small number of
firms in the industry and where
each firm is interdependent with
other firms.
• Monopoly: market structure where one firm
supplies all output in the industry without facing
competition because of high barriers to entry to
the industry.
Activity 05: Oral Quiz/ Recitation
• https://www.youtube.com/watch?v=0Gb4t1L
2MH0
Sectors of Economy
• Primary sector
• Secondary sector
• Tertiary sector
Sectors of Economy
•Primary Sector: “The primary sector of the economy extracts or
harvests products from the earth.” The primary sector includes
the production of raw material and basic foods. Activities
associated with the primary sector include agriculture, mining,
forestry, farming, grazing, hunting and gathering, fishing, etc.

The packaging and processing of the raw material associated


with this sector is also considered to be part of this sector.

In developing countries, economy depends more on


Primary Sector – In Western countries, economy is less dependent
on primary sector.
•Secondary Sector: “The secondary sector of the
economy manufactures finished goods.” All of
manufacturing, processing, and construction lies within
the secondary sector. Activities associated with the
secondary sector include metal working and engineering,
car manufacture, textiles, chemical and technological
industries, energy sector and construction.

•Examples: Pakistan Steel Mills, Toyota Indus Motors,


Nishat Mills, etc.
• •Tertiary Sector: “The tertiary sector of the economy
is the service industry. This sector provides services to
the general population and to businesses.” Activities
associated with this sector include retail and
wholesale sales, transportation and distribution,
entertainment (movies, television, radio,music,
theater, etc.), restaurants, clerical services, media,
tourism, insurance, banking, healthcare, and law.
•Examples: PTV, Geo, Jang, MCB Bank, etc.
Key terms
•GDP:
The total market value of all goods
and services produced within the
political boundaries of an economy
during a given period of time, usually
one year.

The total market value of all goods


and services produced by the citizens
of an economy during a given period
of time, usually one year and includes
income from abroad.

Source: World Economic Glossary 2011


•Human Development Index (HDI): compares
countries on the basis of real GDP, life
expectancy, education (literacy and school
enrolment)

•Human Suffering Index (HSI): takes into


account factors such as access to clean water,
adequate food, and education.
Key Terms
•Goods: “means physical, tangible products
used to satisfy people's wants and needs.”

•Short Run: period of time when at least one


factor input cannot be varied.
•Long Run: period of time when all factor inputs
can be varied.
•Nominal: values unadjusted for the effects of inflation /
values at current prices
•Black Market: “An illegal market in which the price of the
goods sold is above a legally set maximum price. A black
market invariable”.
•Budget: A statement of the financial position of a business,
or government—based on estimates of anticipated revenues
and expenditures.
•Balanced budget :is if the revenues and expenditures are
equal.
•Budget Deficit: A budget deficit arises if expenditures exceed
•Budget Surplus: revenues and a budget surplus exists if
revenues are greater than expenditures.
•Demand: “The ability to buy goods at a range
of prices, during a given time period.” Demand is
one half of the market exchange process; the
other is supply. Demand is created by the wants
and needs of people.
•Supply: “The ability to sell a range of quantities
of a good at a range of prices, during a given
time period.” Ownership and control of
resources is the ultimate source of supply.
Activity 06
Assignment : Identify the top 10 Business Entrepreneur in the Philippines

Midterm Examination
(December 2020)
•What things are included in the ‘Economy’?
•An economy may include several sectors (also
called industries), that evolved in successive
phases. The ancient economy was mainly based
on farming and gathering (barter system).
•The industrial revolution introduced mining, construction
and manufacturing industries as part of economy.
•In the age of technology, we have today Information
Technology, Financial Services, Manufacturing Companies,
Social Organizations, Farming, Public and Private Sector
Businesses.
•Technology companies: Google,
Smart Etc. and many others………..
•All these elements:
- Create jobs/livelihood
- Provide Services
- Increase or Generate revenue
- Open doors for trade & business
Activity 07: Identify each Pictures below
Global economy
Unemployment
The USA department of labor
regularly reports data on the
unemployment rate the
percentage of these not
working but officially defined
as looking for work, currently
almost 8.8million people are
officially unemployed.

Source: US department
(2006)
UNDEREMPLOYMENT
Underemployment
refers to an
employment situation
that is sufficient in
some important way
for the workers,
relative to a
standard..
Activity 08: Interpret the data below.
Conglomerates:
• A conglomerates is a
combination of two or more
corporations engaged in
entirely different business
that feel under one
corporative system.
Activity 09
Presentation per Group: Identify Businesses that is classified as Conglomerates.
https://www.youtube.com/watch?v=dizDATxc9IE
Multinationals:
• Companies or
corporations
that manages
production
and deliver
services in
more than
one country..
Activity 09
Presentation per Group: Identify Businesses that is classified as Multinationals.
https://www.youtube.com/watch?v=FCojpFwWuG0
As of 2006 there were
63,000 multinationals
with over 700,000
branches scattered
across the globe
Current Economics Institutions
Current Economic Institutions
•Post Industrial Societies (Information
Age)
•- Computer changed way of storing,
receiving and analysing information
• Use of computers and robots for manual
work
• Networking has created a ‘global village’
•Shift from physical skills to computer
skills
•Work from home concept
• Internet allows communication,
banking, entertainment, etc.
• Shift to renewable sources of energy
• More access to information through
social media
Global Economy
•“The international network of
individuals, businesses,
governments, and multilateral
organizations which collectively
make production and
consumption decisions”
•GDP tells us about our
country's economy by telling us
the total money value of all
final goods and services in our
country.
•Globalization:
“A global movement to increase
the flow of goods, services,
people, real capital, and money
across national borders in order
to create a more integrated and
interdependent world economy.”
Activity 10 : Recitation
Interpret the Data Below.
2011 Economies
Ranking Country Approximate GDP-
Purchasing
Power Parity
1 United States of America $14,624,180,000,000
2 China $10,084,370,000,000
3 Japan $4,308,630,000,000
4 India $4,001,100,000,000
5 Germany $2,932,040,000,000
6 Russia $2,218,760,000,000
7 Brazil $2,181,680,000,000

Source: CIA World Factbook


Activity 11 : Recitation
Interpret the Data Below.

TRADE IN GOODS AND SERVICES, % OF GDP IN 2015


Activity 12 :
Recitation
Interpret the
Data.
Activity 13:
Recitation
Interpret the
Data.
Activity 14 :
Recitation
Interpret the
Data.
Activity 15 :
Recitation
Interpret the
Data.
Activity 16 : Recitation
Interpret the Data.
Growth Rates of Regional Countries 1961-2009
Source: World Development Index
Activity 17 : Recitation
Identify the country and its product.
Mass Media and Economy
• Mass media refers
collectively to all
media technologies
that are intended to
reach a large
audience via mass
communication
Collapse of global economy
in 2012

Activity 18 : Recitation
Explain and Identify reasons why county collapse?
Economy As Social
Institution In
Pakistan
•The economy of Pakistan is 27th largest in the
world (in absolute dollar terms).
•Pakistan has a semi-industrialized economy
including textiles, chemicals, food processing,
agriculture and other industries.
•Growth poles of Pakistan's economy are
situated along the Indus River and Karachi and
Punjab's urban centers.
•GDP growth, spurred by gains in the
industrial and service sectors,
remained in the 6-8% range in 2004-06
due to economic reforms in the year
2000 by the Musharraf government.
•In 2005, the World Bank named
Pakistan the top reformer in its region
and in the top 10 reformers globally.
•Foreign exchange reserves are
bolstered by steady worker
remittances, but a growing current
account deficit - driven by a widening
trade gap as import growth outstrips
export expansion - could reduce
growth.
History of Pakistani Economy
•Indus Valley Civilisation from 2800 BC to 1800 BC carried
trade through the Indus River, and its inhabitants were some
of the most resourceful traders.

•Pakistan's average economic growth rate since


independence has been higher than the average growth rate
of the world economy during the same period. Average
annual real GDP growth rates were 6.8% in the 1960s, 4.8%
in the 1970s, and 6.5% in the 1980s. Average annual growth
fell to 4.6% in the 1990s with significantly lower growth in
the second half of that decade
During the 1960s, Pakistan was seen as a model of
economic development around the world, and there was
much praise for its economic progression. The capital
Karachi was seen as an economic role model around the
world, and there was much praise for the way its economy
was progressing. Many countries tried to copy Pakistan's
economic planning strategy and one of them, South Korea,
copied the city in its capital Seoul.

•Later, economic mismanagement in general, and


improper economic policies as well as two wars with India
and the separation of Bangladesh negatively affected
economic growth.
Source: Planning Commission of Pakistan, 2010
Source: Planning Commission of Pakistan, 2010
Source: Planning Commission of Pakistan, 2010
• Health….
World Health Org defines health as “a state of complete mental, physical
and social wellbeing and not merely the absence of disease or infirmity” .
• It increases the welfare of people in five ways:
• Helps avoid mental stress and a general dissatisfaction of an individual
from his life.
• Second illness leads to social exclusion which ultimately leads to a
deteriorating quality of life.
Third it increases the productivity of a person as a healthy person can work more
means more productivity and more income both at individual and national level.

Fourth it enables a person to realize his full potential and utilize his maximum
creative ability for innovation.

Fifth helps people to come out of the vicious circle of poverty as low income
causes ill health or malnutrition which lowers the worker productivity and low
productivity means low income and so this vicious process continues.
Poverty
• Although Pakistan has maintained a
much higher growth rate compared to
the region`s average annual growth rate,
it has been unable to eliminate poverty.
• The reasons include improper economic
policies as well as
• Neglect of rural areas, as well as areas
such as Balochistan on political
pretenses
• Improper system of Zakat and Kherat in
the country,
• Inability to reduce and eliminate
begging. Begging becomes an easy
profession for people.
• The basic pre-requisite is to
introduce structural changes in the
economy which requires vision,
sincere effort, political will, and
good governance; some key
characteristics unfortunately not
present in our ruling elite be it the
political elite or civil military top
brass. The poverty in Pakistan
during Bhutto` s regime decreased
because of doing land reforms to
some extent
PAKISTAN’S ECONOMIC FUTURE
Pakistan is still a low income country and it would require
at least next 14 years of 7 percent average annual GDP
growth to double its per-capita income to around $ 2000.

It is easy to make this normative statement but more


difficult question is how can this growth rate be achieved
on a sustained basis? Pakistan was one of the few
countries that grew by 6 percent annually between 1960
and 1990. Growth momentum can also dissipate if other
existing or emerging structural constraints and bottlenecks
are not resolved on time.
• It is possible to reach this goal of
doubling the per-capita income by 2020
• Reducing the poverty by half by 2015.
But for this some preconditions has to
be made…….!
What are these preconditions?
A) favorable global economic
condition
(B) successful integration of Pakistan
into the global economy .
(C) Pursuit of sound, credible and
consistent economic policies
(D) strong institutional delivery and
governance framework
(E) investment in physical
infrastructure
Activity 19: Long Quiz
(Google Sheet)

Activity 20 : Group Presentation


Final Presentation (Outcome Based -50%)

Select one Country, Identify its Economic History and


its characteristics.

Activity 21: Final Examination (50%)


(March )

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