Global Economy

Chapter 11

Industrial Revolutions

The process that takes place when technological innovations lead to more efficient and sophisticated machines to do the work that was previously done by humans

North America went through 2 industrial revolutions to get to where we are now

Some economists believe we are going through #3 now due to increased technology

Types of Resources

Natural Resources = material that can be found in nature and exploited to make a profit

Capital resources = any resource that is designed by society to further create wealth, eg. machinery, buildings, money needed for production

Human resources = the people who live in a country and have the potential to work

Types of Economies

Turn to page 269 in your text. You will be reading about the 4 different

economies and answering questions about each

The Traditional Economy

How is a traditional economy defined? What does it mean that the community is self

sufficient? Describe the distribution of wealth What types of countries have these economies in

today’s world? Read the case study “Shifting Cultivation in Borneo” Answer question 5a on page 278 about this case

study

The Market Economy

What is a market economy driven by? What does this mean?

What happens when the demand for a product decreases?

This type of economy is based on what? What does this mean?

What is an example country with a market economy?

What are the advantages and disadvantages of a market economy?

The Command Economy

Who is the sole decision maker in this economy?

What are they responsible for? Who owns the natural resources and

techniques they use to produce them? What type of country would use these? What are the advantages and disadvantages

to a command economy?

The Mixed Economy

What are mixed economic systems? Why is Canada’s economy mixed? When does the Canadian government

intervene in the economy and how?

Phases of Economic Development

Economist W.W. Rostow developed the modernization theory to explain how countries industrialize

5 stages to theory

Stage 1- The Traditional Society

Large agricultural sector Very limited manufacturing production Life centers around the family and people

rarely leave the region they were born in Eg. Middle East in Biblical times

Stage 2- The Preconditions for Takeoff

Countries productivity is low but new ideas emerge that challenge long standing traditions

These ideas seem extreme at the time but they will lead to political changes that make a more effective government and lead to new ways of producing things

Eg. Protestant reformation which lead people question their religious beliefs- 1500’s

Stage 3- Takeoff

Traditions finally give way to new ideas and changes occur

Great economic growth takes place but usually at the expense of family ties

Religion becomes less important Eg. 1st industrial revolution in Great Britain

when the national income raised and funded the development of natural resources- 1800’s

Stage 4- The Drive to Technological Maturity

Refinements in technology Production rates will increase allowing

manufactures to sell to the domestic market and have enough left over for international trade

Get a higher standard of living because of economic success

Leisure time increases Eg. Great Britain reached this in 1840

Stage 5- High Mass Consumption

Population primarily urban and living standards high for a majority of citizens

Mass production of goods leads to mass consumption (people taught to “need” a products)

Consumer spending will level off and the economy will stop growing = in period of recession

Activity

Arrange yourselves into pairs You are your partner will be ranking the

following jobs from the most important to the least important

miner doctor factory worker

forester firefighter bus driver

garbage collector teacher

lawyer banker athlete

When you have ordered them from most to least importance you will be joining another group to discuss your answers

Each group should explain to the other group why they had the order they did

As group of 4 you will now try to come up with a new order of most to least importance- negotiations will have to be made!

Sectors of the Economy

1. Resource Extraction Most basic sector Known as the primary sector Includes farming, fishing, logging and mining Products come directly from the natural

environment

2. Industry Known as the secondary sector Raw materials are being transformed by physical

labour, mechanical energy and technology into finished products

Eg. iron ore is extracted from the earth in the primary sector and formed into steel in the secondary sector

3. Services Known as the tertiary sector Helps to market and maintain the products which

were made in the secondary sector Eg. steel made in the secondary sector is bought

by contractors to help frame a large house

Questions

List how the 3 sectors of the economy would have produced the following: The textbooks you have at school The shirt you are wearing The cereal you eat in the morning