World Economy: Sectors and Systems

• Lecture 3, given on February 6, 2025, is "The Evolution of the World Economy Economic Sectors and Systems"
• The presenter of the lecture is Dr. Shaneica Lester, and the course is Human Geography 2: World Economy, Agriculture, and Food (GEOG2132)

Lecture Outline

• The Evolution of the World Economy
• Defining Economic Sectors and Systems
• Examining Economic Sectors in the Caribbean
• Examining Economic Systems
• Economic Systems and the Global Supply Chain

Evolution of the World Economy

• The historical framework consists of stages in the evolution of the world economy.
• Those stages are Mercantile Capitalism, Industrialization Revolution and Empire, and Mid-20th century to present
• Theoretical frameworks consists of models of economic development
• Those frameworks are Rostow's Model of Economic Development, Core-Periphery Model and Dependency, and World Systems Theory.

Capitalism

• Capitalism drives the world economic system, based on market competition and private ownership of the means of production.
• It began in Europe at the start of the Renaissance, becoming the force behind industrialization and colonialism. It grew out of feudalism which was dominant until the 15th century (1401-1500) in Europe.
• Under feudalism, land was owned by a king and noblemen, while peasantry (serfdom) worked the land on behalf of this aristocracy.
• In the 14th-16th century (1301-1600), there was the rise of the merchant class across Europe at the start of the Renaissance. Merchant families accumulated fortunes through trade.

Mercantile Capitalism (1450 – 1750s)

• The merchant class were agents of change. They had new business interests overseas during the 'Age of Discovery' – exploration, trade and profit.
• Features: early phase of colonialism. Marked by expansion of European empires: Spain, Portugal, then England, France, and Netherlands.
• Control of trade was crucial to increase profits
• Settlement and trade occurred between mother countries and their new colonies in the Americas, Africa, and Asia.
• Colonization of America in the 1500s (16th century) vastly increased the volume of overseas trade
• The period was marked by the infamous Triangular Trade

Industrial Revolution and Empire (1750s – 1940s)

• Began in Europe and is marked by a transition from an earlier form of agrarian capitalism.
• Technological changes in manufacturing, new sources of power/energy, and new forms of transport altered regional patterns of economic development.
• It resulted in a reorganization of the world's economic geography and expanded international trade significantly.
• Britain, France, Germany and Holland were the first industrial powers in European countries.
• By the 19th century, a third of the world population lived in countries which had been colonized.
• In 1921, 84% of the Earth's surface had been colonized since the 16th century.
• Today, many underdeveloped countries have histories of colonialism.
• The world economy is partly a legacy of conquest and colonization.

Mid-20th Century to Present

• Industrialization started in some developing countries. By the 1950s a few countries in Latin America also became more industrialized, e.g. Argentina.
• Newly Industrializing Countries (NICs) came into prominence in the early 1970s, named Asian Tigers in the 1960s/1970s. Those countries were South Korea, Taiwan, Hong Kong, and Singapore.
• At the beginning of the 20th century, world trade was dominated by Britain, Europe, and increasingly by the U.S.A and later by Japan. International trade in both volume and value increased dramatically.
• Late 20th – Hong Kong, Taiwan, South Korea (NICs) entered export trade and later BRICS.
• Today, the advanced service sector and information technology shape the world economy.
• There is a rise in Financial Services, in rich industrialized countries.
• Many emerging economies such as Mexico, Indonesia, Turkey, Philippines, Thailand and alliances like the BRICS.

Defining Economic Sectors

• There are four main economic sectors
• Primary sector: farming & rearing animals, extraction of raw materials through mining, use of the forest for fishing & hunting, harvesting plants and animals.
• Secondary sector: the physical transformation of a natural resource through manufacturing, processing of primary products, construction, and assembly of finished products.
• Value is added to raw materials via processing and transforming natural resources
• Tertiary sector: provide services, e.g., banking, retailing/wholesaling, insurance, car mechanics/hairdressers, distribution of products, transport of people by transport and tourism.
• Quaternary sector: specialized knowledge and technical services, information gathering/sharing, technology services, R&D, and advanced services known as the "knowledge" sector.

Primary Sector in the Caribbean

• Agriculture accounts for 7-17% of GDP in most Caribbean countries.
• A significant share of the population is employed in the sector (between 10% and 25%, ~50% in Haiti).
• In Haiti, Dominica, Guyana, and Grenada, agriculture is still is a key sector of the economy.
• In Jamaica the primary sector (agriculture) is about 9% of GDP and declining.

Service Sector in the Caribbean

• The Caribbean region moved directly from agriculture to services.
• The industrialization sector never really developed in most Caribbean territories with the exceptions of Puerto Rico and Trinidad & Tobago.
• The Caribbean is the region most reliant on Travel & Tourism globally.
• 8 of the 10 most tourism-dependent countries globally in 2019 were in the Caribbean.

Economic Systems

• An economic system is a system of production, resource allocation and distribution of goods and services within a society or a given geographic area.
• All economic activity takes place within an economic system, which can range in size.
• Small-scale: subsistence agriculture or small-scale manufacturing where places are virtually self-sufficient.
• Large-scale: British Empire and Roman Empire

Types of National Economic Systems

• Capitalist economies: laws of supply and demand determine prices and quantity of goods and services supplied. Market competition determines geographical patterns of production and distribution.
• Socialist planned economies: Communist-controlled societies where government agencies control all production, prices and supply of goods and services.
• Mixed economies: mixture of capitalism and some government control and intervention via a private and public sector arrangement.
• Over history, economic systems became larger, more complex in scale, and more international in scope.
• Globalization and technological change have produced economic systems that increasingly connect countries, people and businesses.
• There are many dimensions to these spatial interactions like financial transactions, international service provision, the international labor market, and international trade/commodity supply chains.
• It resulted in what is now a truly global World Economy.

Economic Systems and the Global Supply Chain

• A global supply chain is an interconnected system of companies and processes across multiple countries. Raw materials, components, and finished products move through various stages of production and distribution.
• It involves sourcing, manufacturing, logistics, and delivery across borders to efficiently meet customer demand while optimizing costs.
• Global supply chains are an important example of spatial interaction in global economic systems.
• It is the connections between all the sources of all the parts it takes to construct and assemble a product, e.g., a cell phone or a motor car.
• A Lee Cooper jeans global supply chain in 2004 example was used in the lesson