UNIT 1

Why isn’t the whole world developed?

The globalization in the financial world began in August of 1971 when the Bretton Woods Treaty
(1944) were abrogated. The Bretton Woods Treaty replaced the “gold standard” with the Us Dollar
as the new global currency. Central banks would maintain fixed exchange rates between currencies
and the dollar.

GROWTH, DEVELOPMENT, PROGRESS

- Growth: sustained increased in the total output of goods and produced by the given society.
- GDP (Gross Domestic Product): the total of all goods and services produced within the
territory of a country.
- Development: Economic development means economic growth accompanied by a
substantial structural or organizational change in the economy. The structural change may
be the “cause” of growth.
- Progress: ethical concept that changes through the past of the years. An economic growth
that can poison the environment can scarcely be regarded as PROGRESS. No relation with
growth and development.

PRODUCTION & PRODUCTIVITY

- Production: is the process by which economic inputs are combined to create the goods and
services desired by human populations. Production can be measured in physical units or in
value terms.
- Productivity: is the ratio of the useful output of a production process to the inputs of the
factor of production. As in the case of production, it can be measured in physical units or in
value terms.

*EPISODES OF ECONOMIC GROWTH: WALT WHITMAN ROSTOW FIVE STAGES OF GROWTH

1. Traditional Society: agricultural-based economy with extensive labor and low levels of
trading. No scientific perspective or technology.
2. Preconditions to Take-off: society begins to develop manufacturing in a more
national/international outlook.
3. Take-off: short period of intensive growth, in which industrialization begins to occur, and
workers and institutions become concentrated around a new industry.
4. Drive to Maturity: Standards of living rise, the use of technology increases, and the national
economy grows and diversifies.
5. Age of High Mass Consumption: country’s economy flourishes in a capitalist system,
characterized by mass production and consumerism.
 UNIT 2

CHARACTERISTICS OF PRE-INDUSTRIAL ECONOMIES

- Dominance of extensive agriculture.

- Low productivity economies.
- Industry was not important.
- Bad communication between regions in the same country.
- Weak monetary and financial system.
- Economies base on organic energy.
- Institutional and social framework not very prone to growth.

PRE-MODERNEMOGRAPHIC MODEL

- The most densely populated areas were the places where manors and villages had been
established.
- By the 14th century European population have reached 90 million, spread from Ireland to
the Balkans due to the growth of the cities.
- Better nutrition due to larger, more stable, and more varied food supplies.
- Improvements in agriculture technology  population growth.
- Total factor of productivity grew. Increase in the returns from all three inputs: labor, land,
and capital.

AGRICULTURAL CHANGES

Grain output rose in England over 75% by extending the cultivated area in many ways:
- Clearing the woodlands and bringing the woodland into arable production.
- Draining waterlogged land and to reclaim it for agriculture and brought this land into
permanent pasture use. The Crown participated in this activity. This technique created
specialization in accordance with the best use of land.
This created intensification of cultivation by introducing technical changes. They also introduced
new systems of rotation

THE FEUDAL SOCIO-ECONOMIC SYSTEM

- Communities: local term that speaks about society in a certain period of time (rural).
- Rural Community: relationship of authority between Lordship and Tenancy.
- Lordship: possessions of the land and authority over tenants. The fact of Lordship over
Manor.
- Tenant: people that cultivated the land owned by the lord.
- Manor: divided in demain land and tenant land.
- Demain Land: cultivated by Serf Labour.
- Tenant Land: hold by freeholder. Only owned the duty of recognition of the lordship and
paid small amount annual to the lordship.
- Copyholder: hold the land for a period of years or period of lives.
- Custom of the Manor: local map of rights and obligations.
FARMING PRODUCTION, VARIETIES OF EUROPEAN AGRICULTURE

The most important operations were Plowing, Sowing and Harvesting, which involve almost all
inhabitants. Due to the open-field system, cooperation was required.

An innovation was the substitution of a Two-Course Rotation for the Three-Course Crop Rotation.
Other significant innovation was the Heavy Wheeled Plow.

The Three-Course Crop Rotation increased productivity of the soil because there was a third more
of arable land. With this technique they gained a 50% of productivity and became more developed
during the XIX century.

*THE MALTHUSIAN TRAP

There are physical limits to the amount of cultivable land, and we can’t escape from that fact. As
population increases the land-to-labor ratio will fall or the quality of marginal land will fall. Malthus
stated that there was no technological progress in agriculture, which means, there is no increase in
the efficiency. Population grows exponentially while supply grows arithmetically.

MANUFACTURING PRODUCTION IN THE MIDDLE AGES AND IN THE MODERN AGE: THE PROTO-
INDUSTRY