Economy

Regions and the people of the World

Unit 5
 Overview of Global Economy

UK/US Economy

Outline • History & Economic growth

• Distribution of wealth

Economic issues
• Experience economy in the UK
• Trade depute bw US-China

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 Wealth distribution

World Money forms

economy
National debts

Watch and take notes

http://money.visualcapitalist.com/much-
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money-humans-created/
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Statistics on
Economies
Business Dynamism,
Financial System and
The Labor Market

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 3rd largest economy in EU; World largest economy by

Profile of 2nd largest financial

economy in the world with a
nominal GDP.
It’s a mixed economy which

US/UK
marked postwar shift in used to depend on
economic power from agriculture, but now the
manufacturing (Oil and Gas major strength of US

Economy extraction) to services (80%

of GDP)
economy is industrial sector.

Finance and banking Energy (petroleum)

Information technology Manufacturing ( motor vehicles,

electronics, consumer goods)
Structure & Main sectors Manufacturing
Chemicals
Wholesale and retail
Telecommunication
Construction
Food processing
Transportation and logistics
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Aerospace
Education
1600-1700

Many fundamental Colonial America

economic changes was a
occurred, which pave the predominately
way to the industrial agricultural
revolution. economy.

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 1700-1900
• By 1720s, became one of the most prosperous
regions in the world. The mercantilism took
place, Britain also imposed this on its colonies.
• 18th century, the Industrial Revolution
transformed E economy with large industries
being located in large urban center.
• 19th century: Britain abandoned mercantilism
and committed its economy to free trade (with
no tariffs and few trade barriers).
• In 1783, the global economy of the United States
of America is born.
• In 1787, America’s economy saw tremendous
growth with productivity growth of about 2% per
year.
• 1840s - the Golden Age of the steamboat,
railroad, picked up the reigns of the American
economy.
• By the Civil War, a third of the national economy
was powered by manufacturing
• Economic recessions in 1873 and 1893.
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 1900-1947
- 1914-1918: the First World War-> a decline in
economic production and consumer
consumption, however, Britain’s financing was
generally successful.
- Post war: By 1921, more than 3 million
Britons were unemployed as a result of the
postwar economic downturn
- Economic prosperity during the “Roaring”
1920s was driven by post-war consumerism.
- Great Depression and World War II caused
disastrous economic effects.
- Under the watch of President Franklin Delano
Roosevelt, America launched a vast economic
stimulus program called the “New Deal”.
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1950s-2000s
• 1950s - 1960s: prosperous times,
continued modernization of the
economy with only 2% of
unemployment.
• 1979-1990, the Thatcher era marked the
end of the post-war consensus and a new
approach to economic policy.
• Late 1980s: officially the longest
recession in Britain.
• 1990s: Recovering from recession and
leaving ERM (Exchange Rate
Mechanism); downfall of the
Conservative government.
• 1977 - 1981, the trade deficit increased
dramatically, inflation hit its highest point
since World War I, and unemployment had
climbed to 9%.
• A recession of the early 1990s lingered from
the stock market crash of 1987.
• The economy of the 1990s was driven by the
rise of technology and the Internet, whose
companies made startling gains on the stock
market.
• 2000s, a ‘lost decade’ for U.S. economy with
zero net job growth and the slowest rise in 12
economic output since the 1930s.
 Economic
growth in 2000s

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Distribution • The UK: North South Division

of wealth
• The US: Income/pay/wealth inequality

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 North-South
Division in the UK
• The North (containing Scotland, the North
West and East, Yorkshire and the Humber,
Wales and most of the West Midlands)

• The South (containing the South West and

East, the East of England, London and most
of the East Midlands). Childhood His/her education People who
• In political terms, the South, and particularly experiences that influenced him / her
the South-East (outside inner London), is influenced him/her
largely centre-right, and supportive of the
Conservative Party, while the North
(particularly the towns and cities) is
generally more supportive of the Labour
Party

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 North-South
Division in the UK
• The sound of the country is richer
than the north.
• The average household income in
London is considerably higher than in
the North East.
• An average household in the South
East has almost twice (183%) the
amount of wealth of an average
household in Scotland
• Average household wealth in the
north-east, at £150,000, was less than
half of that in the south-east, where it
was £342,400. (2014).
Reasons
The North
In the past, high level of industrialization, but the end of
industrialization revolution => Deindustrialization of the
heavy and manufacturing industries of the north
More social problems + migrants in the north => high
proportion of unskilled workforce
Not enough investment in economy
The South
Increased hi-technology industries + service sector
employment in the south
London: the political, financial and culture centre.
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 Income/Wealth The poorest fifth have only 8% of the total income, whereas the top fifth
have 40%.
inequality in the Wealth in Great Britain is even more unequally divided than income.
US The richest 10% of households hold 45% of all wealth.

The poorest 50%, by contrast, own just 8.7%.

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 Economic
Households are spending
• less on clothes and food but
issues • more on holidays, cars, entertainment,
eating out and gadgets.

Experience economy in UK
A huge shift in consumer behavior from:
 buying things to doing things
 spending on products to experiences
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 https://www.bing.com/videos/search?q=China+US+trade+war

Economic
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issues https://www.bing.com/videos/search?q=China+US+trade+war
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Trade dispute China - US

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 https://www.bing.com/videos/search?q=Japan+history+and+e
conomic+development&&view=detail&mid=09B61BFA0F8B36
17CA3809B61BFA0F8B3617CA38&&FORM=VRDGAR

Economic https://www.bing.com/videos/search?q=China+economy+issu

issues
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• China -2nd largest Economy

• Problems of Chinese Economy
• Environmental Impact of
Economic activities in China

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 Reduced global trade
volume

Emerging economies

Countries consume more of

what they produce

https://www.visualcapitalist.com/5-hidden-ways- 23
globalization-changing/
 Trade in services is more
valuable than trade in goods

Conventional service trade

Services embedded in goods trade
Intangible assets
Free cross-border digital services

https://www.visualcapitalist.com/5-hidden-ways-globalization- 24
changing/
 Automation, AL
reduce labor inputs

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 Highly skilled labor forces
Strong innovation ecosystem
Robust intellectual property protection
=> Competitive advantages

https://www.visualcapitalist.com/5-hidden-ways-
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globalization-changing/
Companies prioritize proximity to
customers and speed to market

https://www.visualcapitalist.com/5-hidden-ways-globalization- 27
changing/