Unit 1 2024 (2)
Uploaded by
masondombongeni256Unit 1 2024 (2)
Uploaded by
masondombongeni256ECO11
10F
Nisreen Narker [email protected]
Room 2.13 Leslie Commerce
Unit 1
• PROSPERITY, INEQUALITY AND PLANETARY LIMITS
Aim of Unit 1
• Introduction to the concept of hockey-stick growth
• In income levels
• In greenhouse gases
• Introduction to income inequality
• Income inequality between countries and within countries
• Explain the economic stagnation in the pre-industrial era
• Understand production functions and the average product of labour
• Understand the Malthusian explanation of population growth and living at the subsistence level
• Understand why economics was called the “dismal science”
• Understand the system of capitalism
• How it developed from the Industrial Revolution
• Main characteristics
• The capitalist system in relation with the environment and biosphere
Unit 1
Unit 1:
• PROSPERITY, INEQUALITY AND PLANETARY LIMITS
Prosperity,
inequality We will cover the following sections of Unit 1 in
and the CORE text (edition 2.0):
planetary 1.1 – 1.8, 1.12, 1.13
limits The following sections are not examinable:
1.9 – 1.11
The
Context
for This
Unit (unit 1.2)
Hockey stick growth
• For many centuries, the level of income remained unchanged
• England started growing slowly in the 18th century, and increasingly
rapidly thereafter
• Economic take-off was much later for many other countries
• Currently there are large differences in average standards of living
between countries
Another example of hockey-
stick growth: carbon emissions
(see unit 1.3)
Rapid increases in global
temperature
Inequality of global income (see unit
1.4)
• Absolute poverty
(where one’s survival
was literally at risk)
was the norm in pre-
industrial times
• Absolute poverty has
decreased
substantially over the
past 200 years
Economic growth allows countries to escape from
absolute poverty
Economi
c growth Living standards improve
and
living One measure of improving living standards is life
expectancy at birth
standard
See video of changes in GDP per capita and life
s expectancy at
https://www.youtube.com/watch?v=jbkSRLYSojo
Income inequality between
countries is very substantialThese are based
on 2019 data
Another way to look at income
inequality between and within
countries
The situation
in 1980
The situation in 2020
What these slides tell us
• The higher the bar, the higher the standard of living (income levels)
• The effect of price increases and differences in prices between countries is
suppressed (by using constant 2021 international dollars)
• The width of the bar indicates the size of the population
• Within countries, there are large income differences between poor and rich
(compare the lowest bar in a country with the highest bar in the same country)
• Between 1980 and 2020, average income levels have increased a lot in most
countries
• Some countries have performed extremely well between 1980 and 2020 and
some have slipped badly
• For more detail on how to construct and interpret these diagrams, see the text
(unit 1.4)
Where do
you and
your family
fit into • See
South https://www.saldru.uct.ac.za/income-comparison-
tool/
Africa’s
income
distribution
?
To think about….
What would this diagram have looked like 500 years ago?
The continuous technological
revolution (unit 1.5)
• Inventions, scientific and technological advances in the latter half of the 18th
century (i.e. 1750-1800) improved ways of production
• What is technology?
• Machinery, equipment and devices developed using scientific knowledge
• A process that transforms inputs to outputs
• Four waves of the Industrial Revolution
• First IR: 18th century; based on steam/coal power
• Second IR: Late 19th and early 20th century; based on electricity, assembly line and
mass production
• Third IR: 1970s – 1990s; based on computers and partial automation
• Fourth IR: 21st century; information, communication and network technologies,
autonomous production
• Important: the impact of the invention is felt across many sectors of the
economy
The importance of coal and
steam in the first Industrial
Revolution
