Download Unit-II Economies accross the globe-Students` Manual - CBSE

CLAS S
IX
UNIT-2
CBSE-i
Economics
Unit-II
ECONOMIES ACCROSS
the
Gl be
Students’ Manual
Shiksha Kendra, 2, Community Centre, Preet Vihar, Delhi-110 092 India
CBSE-i
Economics
Unit-II
ECONOMIES ACCROSS
the
Gl be
Students’ Manual
CLAS S
IX
UNIT-2
Shiksha Kendra, 2, Community Centre, Preet Vihar, Delhi-110 092 India
The CBSE-International is grateful for permission to reproduce
and/or translate copyright material used in this publication. The
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Preface
Education plays the most important role in acquiring professional and social skills and a positive attitude to face thechallenges of
life. Curriculum is a comprehensive plan of any educational programme. It is also one of the means of bringing about qualitative
improvement in an educational system. The Curriculum initiated by Central Board of Secondary Education-International
(CBSE-i) is a progressive step in making the educational content responsive to global needs. It signifies the emergence of a fresh
thought process in imparting a curriculum which would restore the independence of the learner to pursue the learning process
in harmony with the existing personal, social and cultural ethos.
The CBSE introduced the CBSE-i curriculum as a pilot project in few schools situated outside India in 2010 in classes I and IX and
extended the programme to classes II, VI and X in the session 2011-12. It is going to be introduced in classes III, VII and for Senior
Secondary classes with class XI in the session 2012-13.
The Senior Secondary stage of education decides the course of life of any student. At this stage it becomes extremely important
for students to develop the right attitude, a willingness to learn and an understanding of the world around them to be able to
take right decisions for their future. The senior secondary curriculum is expected to provide necessary base for the growth of
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Biology, Accountancy, Business-Studies, Economics, Geography, ICT, English, Mathematics I and Mathematics II. Mathematics
at two levels caters to the differing needs of students of pure sciences or commerce.
The Curriculum has been designed to nurture multiple intelligences like linguistic or verbal intelligence, logical mathematical
intelligence, spatial intelligence, sports intelligence, musical intelligence, inter-personal intelligence and intra-personal
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The Core skills are the most significant aspects of a learner's holistic growth and learning curve. The objective of this part of the
core of curriculum is to scaffold the learning experiences and to relate tacit knowledge with formal knowledge. This involves
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Work and Action), Life Skills and Research would be the constituents of this 'Core'. The CBSE-i Curriculum evolves by building
on learning experiences inside the classroom over a period of time. The Board while addressing the issues of empowerment with
the help of the schools' administering this system strongly recommends that practicing teachers become skilful and lifelong
learners and also transfer their learning experiences to their peers through the interactive platforms provided by the Board.
The success of this curriculum depends upon its effective implementation and it is expected that the teachers will make efforts to
create better facilities, develop linkages with the world of work and foster conducive environment as per recommendations
made in the curriculum document.
I appreciate the effort of Dr. Sadhana Parashar, Director (Training), CBSE and her team involved in the development of this
document. I specially appreciate the efforts of (Late) Dr. Srijata Das for working tirelessly towards meeting deadlines.
The CBSE-i website enables all stakeholders to participate in this initiative through the discussion forums. Any further
suggestions on improving the portal are always welcome.
Vineet Joshi
Chairman, CBSE
Acknowledgements
Advisory
Conceptual Framework
Shri Vineet Joshi, Chairman, CBSE
Dr. Sadhana Parashar, Director (Training), CBSE
Shri G. Balasubramanian, Former Director (Acad), CBSE
Ms. Abha Adams, Consultant, Step-by-Step School, Noida
Dr. Sadhana Parashar, Director (Training), CBSE
Ideators
Dr. Anju Srivastava
Ms. Sarita Manuja
Ms. Varsha Seth
Prof. Chand Kiran Saluja
Mr. N. K. Sehgal
Ms. Preeti Hans
Ms. Sunita Tanwar
Dr. Usha Sharma
Dr. Uma Chaudhry
Ms. P Rajeshwary
Ms. S. Radha Mahalakshmi
Ms. Renu Anand
Ms. Anita Sharma
Ms. Suganda Vallli
Ms. Neelima Sharma
Dr. Rajesh Hassija
Mr. Mukesh Kumar
Material Production Groups
English :
Ms. Gayatri Khannaa
Ms. Renu Anand
Ms. P. Rajeshwary
Ms. Sarabjit Kaur
Hindi :
Ms. Sunita Joshi
Ms. Babita Singh
Ms. Veena Sharma
Sh. Akshay Kumar Dixit
Core- SEWA
Ms. Vandna
Ms. Nishtha Bharati
Ms. Seema Bhandari
Ms. Seema Chopra
Ms. Madhuchhanda
Ms. Reema Arora
Ms. Neha Sharma
Chemistry
Ms. Charu Maini
Ms. S. Anjum
Physics:
Ms. Novita Chopra
Ms. Meenambika Menon
Biology :
Ms. Pooja Sareen
Ms. Neeta Rastogi
Core- Prespectives
Ms. Madhuchhanda,
RO(Innovation)
Ms. Varsha Seth,
Consultant
Ms. Neha Sharma
Mathematics :
Dr. K.P. Chinda
Dr. Ram Avtar
Mr. Mahendra Shankar
Mr. J.C. Nijhawan
Ms. Rashmi Kathuria
Ms. Reemu Verma
Ms. Arti
Ms. Himani Ashija
Economics:
Ms. Anubha Malhotra
Ms. Vintee Sharma
Ms. Chaitali Sengupta
Core-Research
Ms. Renu Anand
Ms. Gayatri Khanna
Dr. N. K. Sehgal
Ms. Anita Sharma
Ms. Rashmi Kathuria
Ms. Neha Sharma
Ms. Neeta Rastogi
Ms. Manjushtha Bose
Ms. Varsha Manku
Dr. K. L. Chopra
ICT:
Mr. Yogesh Kumar
Ms. Nancy Sehgal
Ms. Purvi Srivastava
Ms. Babita Mahajan
Ms. Ritu Arora
Ms. Swati Panhani
Ms. Chanchal Chandna
Geography:
Ms. Meena Bharihoke
Ms. Parul Tyagi
Ms. Sudha Tyagi
Ms. Sonia Jarul
Ms. Neena Phogat
Mr. Nisheeth Kumar
History:
Ms. Sajal Chawala
Ms. Jyoti Sharma
Ms. Kamma Khurana
Ms. Shalini Chatarvedi
Mr. Dalia Haldar
Ms. Preeti Gupta
Political Science:
Dr. Sangeetha Mathur
Ms. Ananya Roy
Ms. Sunita Rathee
Ms. Amarjit Kaur
Ms. Nishu Sharma
Ms. Manisha Anthwal
Ms. Mamta Talwar
Chief Co-ordinator : Ms. Kshipra Verma, EO
Coordinators:
Ms. S. Radha Mahalakshmi, E O
Sh. R. P. Sharma
Consultant (Science)
Ms. Monika Munjal Gandhi
(Coordinator)
Mr. Navin Maini, RO (Tech)
Ms. Neelima Sharma,
Consultant (English)
Mr. Sanjay Sachdeva, DO
Shri Al Hilal Ahmed, AEO
Ms. Deepa Shukla
Consultant (Biology)
Shri R. P. Singh, AEO
Ms. Reema Arora
Consultant (Chemistry)
Contents
I)
Types of Economies: Developed and Developing Economies
1
E
Different Criteria of Development
E
Classification in terms of Per Capita Income
E
The World Bank Classification
II)
Common Characteristics of Developing Economies
4
E
Low GNP per capita and widespread poverty
E
Occupational pattern
E
Scarcity of Capital
E
Rapid population growth and high dependency burden
E
Low Productivity of Labour
E
High levels of unemployment and underemployment
E
Demographic factors
E
Technological Backwardness
III) Difference between Developed and Developing Countries
IV) Structure of an Economy - Economic Systems
7
13
E
Traditional Economy
E
Free Market Economy
E
Planned Economy
E
Mixed Economy
V)
The Great Depression
26
E
Causes of the Great Depression
E
Impact of the Great Depression
E
The end of the Great Depression-turning point and recovery
VI) Challenges faced by Developing Economies
34
E
Food Security
E
Housing
E
Health
VII) Solution to Worksheets
VIII) Assessment Rubrics
IX) References and Links
71
Unit – II Economies Across the Globe
Introduction
Economies across the Globe
An economy is a framework within which economic activities are carried out. It
provides people with the means to work and earn a living. The English words
"economy" and "economics" can be traced back to the Greek words οἰ κονόμος, i.e. "one
who manages a household", a composite word derived from οἴ κος ("house") and νέμω
("manage; distribute"); οἰ κονομία ("household management").
An economy consists of the economic system of a country or other area; the labour,
capital and land resources; and the manufacturing, trade, distribution, and
consumption of goods and services of that area.
To understand the mechanism of the world economy better, a beginning can be made
by studying about types of economies and economic structures of the same.
I.
Types of Economies: Developed and Developing Economies
Economies of the world can be
broadly
classified
categories—Developed
into
two
economies
and Developing economies. How do
we distinguish between developed
and developing countries? We may
use the terms: rich and poor, advanced
and backward, high income and low
income, industrial and agricultural, etc. The literature is full of euphemisms,
particularly for the lower income countries, for example, emerging economies,
countries on the way to development or even ‗underdeveloped economies’.
1
Some
leading
Latin
American
and
African
economists
believe
that
underdevelopment is not merely lack of development whereas Western
economists believe that under development is just lack of development.
The developed economies comprise the advanced countries. The USA, the UK,
France, Germany, Canada, Australia and Japan are among the most developed
nations. Developing countries have though not achieved what the developed
economies have, yet the process of development has been initiated in these
countries.
Different criteria of measuring development:
Per capita income
Poverty
Developmental potential
The emphasis to measure the level of development of a country by and large has
been on whether the country has good potential prospects of raising per capita
income, or of maintaining an existing high level of per capita income for an
increased population. The following points must be borne in mind while
measuring underdevelopment:
(a)
Per capita income is not the only indicator, though it is the most important
single measure of comparison for different economies.
(b)
The central problem of underdeveloped economies is the prevalence of ‗mass
poverty‘ which is the cause as well as consequence of their low level of
development.
(c)
‗Mass poverty‘ is the result of the lack of resources with the poor.
(d) Natural resources of a country act as a limiting factor in economic
development.
2
(Even though a country may use all its productive resources, it may still not
be enough to reach the development levels of an advanced country.)
The UN experts have defined an underdeveloped country in terms of real per
capita income, Modern development economists define development as a
process
involving
elimination
of
poverty,
income
inequalities
and
unemployment. Development potential of a country (for using more capital or
more labour or more natural resources or all of these to support its population on
a not lower level of living) is considered a much better criterion to judge the
extent of its development by economists like Jacob Viner.
Classification in terms of Per Capita Income:
A)
Developed Countries are those whose per capita incomes ranges from
$10,000 to $30,000
These are countries with extensive infrastructure, a
largely urban population, an educated labour force, a high standard of
living, and frequently competence in high technology and science. We can
also call them industrial countries as their service sector is quiet developed
e.g., United States, Cananda, The United Kingdom, France, Germany, Japan,
Australia and New Zealand. These advanced countries work together in the
Organization for Economic Cooperation and Development (OECD).
B)
Developing Countries are those whose per capita incomes range from
almost $10,000 at the upper end to less than $1000 per year at the bottom.
East Asia is a good example of the great differences among these countries,
ranging from Singapore, Korea and Taiwan at the top, to Indonesia and
Vietnam at the lower end. Latin America belongs to this category, as do
many countries of North Africa. Many of these countries still lack sufficient
infrastructure
and
education.
They
are
increasingly
becoming
industrialized; some of them are now centers of the world‘s labourintensive mass production industries. These countries are also rapidly
3
becoming urbanized, creating some of the world‘s largest cities, like Lagos,
Bangkok and Mexico City. On the other hand, many of them still have large
rural populations engaged in agriculture. In these countries, development is
clearly a primary concern.
Can you think of some names of countries that have become centers of the
world‘s labour-intensive mass production industries?
C)
Finally, there are the very poor countries, with per capita incomes of less
than $755. These countries, for example in Sub-Saharan Africa, are still
largely dependent on primitive subsistence agriculture. They all have low
standards of living and most of them lack the infrastructure, education and
stable political organizations necessary to begin the development process.
II.
Common Characteristics of Developing Economies
The developing countries constitute most of the world‘s land surface and bulk of
its human race. Some common characteristics of developing economies can be
studied as follows:
1.
Low GNP per capita and widespread poverty:
GNP per capita in such economies is very low and there is widespread
poverty. It includes not only low income but also malnutrition, poor health,
lack of proper clothing, shelter and lack of education. Poverty is the basic
malady—Prof. Cairn cross states that underdeveloped countries are the
slums of the world economy.
Not only is there extreme poverty, but income inequalities are also very
large in developing economies. Countries like Kenya, Colombia, Malaysia,
Brazil, etc., have considerable degree of income inequality while developed
4
industrial market economies such as Finland, Australia, Netherlands,
Sweden, USA and Japan have relatively less inequalities.
2.
Occupational pattern:
Another characteristic is that this economy is agrarian. A very high
proportion of working population is engaged in agriculture, which
contributes a very large share in the national income. Technologically,
agriculture is far more backward in developing than in developed
countries. Countries like India, China, Tanzania fall in this category. In
contrast, Lebanon, Chile, Argentina and Uruguay are not agrarian
economies—still they are developing.
3.
Scarcity of Capital:
Capital accumulation (or investments) is the very core of economic
development. The rate of capital formation is relatively low in most of the
low income, less developed economies due to widespread poverty. When
the absolute income is high, the ability to save is also high. Japan, a highly
developed country has high incomes and hence high savings. Among the
developing countries, China has a high savings rate mainly due to rational
state intervention in the working of the economy. Nurkse has stated that
most developing countries are caught in the vicious circle of poverty, and
thus their capacity to save is very low.
4.
Rapid population growth and high dependency burdens:
Developing countries have high rates of growth of population as their birth
rates are high, and although their death rates are also high there is usually a
big gap between the two figures
5
5.
Low productivity of labour:
It is both the cause and effect of low standards of living in these economies.
Labour productivity depends on a number of factors, such as, health and
skills of workers, availability of other inputs which are combined with
labour in the production process, motivation for work and so on.
Developing economies must thus eliminate exploitative land tenure
systems, improve credit and banking structures and carry out other reforms
to improve labour productivity.
6.
High levels of unemployment and disguised employment:
Widespread unemployment particularly among the unskilled workers is a
universal phenomenon in developing countries. Disguised unemployment
is very common in agriculture due to increasing pressure of population on
land. There are no alternative employment opportunities and hence the
problem
continues
to
grow.
Over
a
period
of
time,
structural
unemployment in underdeveloped countries tends to grow worse. The
gravity of the situation can be followed from the fact that almost 30% of the
total urban and rural labour force in developing nations is unutilized.
7.
Demographic factors:
The developing countries suffer not only from low average incomes, but
also from less calories available from consumption, fewer doctors, low
literacy rates, short life expectancy and high infant mortality rates.
8.
Technological Backwardness:
In developing countries, production techniques are backward. There is lack
of research and development, and more labour intensive techniques are
followed to provide employment to the huge labour force. All this has an
effect on the country‘s competitive strength in international markets.
6
III.
Differences between Developed and Developing Countries
Developed countries are highly industrialised with higher levels of per capita
incomes. Such economies have higher standards of living, A person's standard of
living tells how well off he/she is. Some factors that can be used as standard of
living indicators are:
Their average income
The average number of calories eaten per person
The number of people per doctor
The percentage of people who are able to read and write
The average life expectancy
The infant mortality rate
Some parameters that can be discussed to analyse the difference between
Developed and Developing Economies:
Parameter- I-Poverty: The developing countries, as discussed earlier, have low
per capita incomes and greater poverty. Developed countries have higher per
capita incomes. Data for some countries can be studied here ( extract from the
World Development Report.)
Country
GNI per capita based on PPP 2010
Nigeria
2,170
India
3,550
Thailand
8,190
Brazil
11,000
Mexico
14,290
France
34,440
Japan
34,640
Germany
37,950
Netherlands
41,900
USA
47,360
7
PPP= Purchasing Power Parity. GNI= Gross National Income. GNI is the sum
of value added by all resident producers plus any product taxes (less subsidies)
not included in the valuation of output plus net receipts of primary income
(compensation of employees and property income) from abroad. PPP GNI is
gross national income (GNI) converted to international dollars using purchasing
power parity rates.
Parameter II- Life Expectancy: This is the number of years an individual is
expected to live. Life expectancy is low in developing countries while it is high in
developed countries. The graph below shows that women in the developed
world have the longest life expectancy and men in the developing world the
shortest.
List by United Nations (2005-10)
Life Expectancy at birth ( in years)
8
Name of the Country
Life Expectancy
Japan
82.6
Switzerland
82.1
Australia
81.2
Canada
80.7
Norway
80.2
U.K
79.4
USA
78.3
India
64.7
Ethopia
52.9
Afghanistan
43.8
Swaziland
39.6
Mozambique
39.2
The life expectancy at birth of the world is 67.2 years (65.0 years for males and
69.5 years for females) for 2005–2010, according to United Nations World
Population Prospects 2006 Revision and 66.57 years (64.52 years for males and
68.76 years for females) for 2009 according to CIA World Fact Book 2009.
Parameter III- Growth rate of population:
Developing countries have high rates of growth of population as their birth
rates are high, and although their death rates are also high there is usually a big
9
gap between the two figures. Developed countries have low birth rates and low
death rates, leading to low rate of growth of population.
Developed countries have low birth rates because:
A.
It is expensive to look after large families.
B.
More women prefer to concentrate on their careers.
C.
Increasing gender equality has meant women have more control over their
own fertility.
D.
There is a ready availability of contraception and family planning advice.
As can be observed in the world map, birth rate is highest in countries of Africa
and parts of Asia. According to the CIA's The World Fact Book, (estimates for
2011) the country with the highest birth rate currently is Niger at 50.54 births per
1000 people. The countries with the lowest birth rates are Monaco at 6.94 and
Japan at 7.31 births per 1000 people.
10
The United Nations Population Division's estimates for 2010-15 gives out a list of 12
countries of Africa with birth rate of over 40. Students may be asked to find these
countries.
Parameter IV- Death Rates are higher in developing countries because of
A) Poor/ medical/knowledge
B) Poor diet
C) Poor water supply
D) Unhygienic sanitation
Developed countries have low death rates because, in many cases, there are:
Good housing conditions
Safe water supplies
More than enough food to eat
Advanced medical services which are easy to access
Some developed countries have a high death rate as they have an ageing
population with many older people.
11
Death rates across the world can be seen in the world map. Students can observe
that parts of Africa and Asia with high birth rates also have high death rates.
When a country's population grows slowly (developed economy), it has the
following effects:
It has an ageing population, so a large amount of money is spent in providing
services, e.g. healthcare, for older people.
As there are fewer young people, less money needs to be spent on this age
group.
There could be a shortage of workers in the future , since young people are
few.
Migrants move into the country, often to work in the low paid, low status
jobs that would otherwise be difficult to find workers for
12
Infant Mortality Rate: The infant mortality rates are high in developing
countries. Due to high literacy levels, good standard of living and access to
medical services, infant mortality is extremely low in developed countries.
Students can analyse the bar graph. Maximum percentage of children die in
Africa, followed by Asia by the time they complete five years of their life.
Europe and North America have a very low percentage of children dying before
their fifth birthday.
IV.
Structure of an Economy
The way that each individual lives in a society is based on how the country
handles problems and questions involving their economy. These are issues
dealing with inflation, consumer needs, and so forth. When it comes to an
economy, there are three basic economic questions that each must answer. They
are:
13
What will be produced with the resources?
How will these goods be produced?
For whom will goods be produced?
Economic Systems:
An economic system is basically the decision making that is done to answer these
questions. It is defined as an arrangement by which the central problems of an
economy are solved. An economic system is composed of people, institutions,
rules, and relationships, for example, the institution of government, or the
employee-employer relationship..
The economic system a country has is based on what is best for the country. One
person might feel a market economy is best for one country but it may not suit
another. Determining how an economy works can help you make better
decisions as an individual, and participate more in issues involving the economy
as a whole. And becoming an economically-effective citizen helps you benefit the
entire country.
There are four types of economic systems present in the world: the traditional
economy, command economy, the market economy and the mixed economy.
Today, most economies can be classified as Capitalist, Socialist or Mixed. There
are also unlimited amounts of variations of these systems. Currently, all real
economies combine parts of capitalism with those of central planning. Each
country around the world differs from one another in the amount they use the
two systems. In the world today, free market economies have social programmes
such as the Social Security System in The United States. Command economies
like China are introducing free market economies into their economy. With the
information age upon us, only time will tell where the world economies are
headed.
14
A.
Traditional Economy:
Traditional
Economy
is
a
term
normally used to describe economic
systems that pertain to societies with
extensive
subsistence
agriculture.
"Traditional economy" is based on
customs
and
traditions
of
the
community or family. An example of a
traditional society would be that of the
Inuits (also called Eskimos-they are a
group of culturally similar indigenous peoples inhabiting the Arctic regions
of Canada, Denmark (Greenland), Russia (Siberia) and the United States
(Alaska). There, people living in an agricultural village still plant and
harvest their own food on their own land. And the ways they produce
clothing and shelter are almost exactly the same as those used in the past.
Tradition decides what these people do for a living and how their work is
performed.
B.
Free-market economy:
Free-market economy is also called a capitalist economy.
This economic system is based on private property and private profit. It is
an economy that has very little government control. So if an individual
wanted to start his own business, he would not have to get permission from
the government. Some examples of countries with a free market economy
are United States of America, Germany and England.
Main features of capitalist economies include:
15
1.
Private ownership of property
In capitalism, all factors of production are
owned and managed by the private sector. All
utilities and infrastructure are owned by
private firms.
2.
Freedom of enterprises
Individuals are free in capitalist economies to
choose any job they like. Also, individuals are free to save and invest in
whatever form they choose.
3.
Profit Motive
In a capitalist economic system, production is carried out to maximize
private profit. This economic system encourages economic activity and risk
taking since there is greater incentive to work hard. It results in most
efficient utilization of resources. People can take the risk of starting their
own business and losing money or starting their own business and making
lots of money.
4.
Price Mechanism guides production decisions
In a capitalist economy, price mechanism guides production decisions, i.e.,
what to produce, how much to produce and
how to produce. Price
mechanism is a process where price is determined by market forces of
demand and supply. The laws of supply and demand drive the free market
economy. As supply goes up, the prices go down. When the demand goes
up, the prices go up. Prices serve as a signal to the producers to decide
what to produce, and to the consumers to decide what to consume.
For example, the question of what to produce may be based on what trend
is popular right now. The producer would create a product that they think
16
would sell well to the public in hopes to make a profit. The question of how
to produce is usually based on the producer's choice. They might decide to
produce a product with more workers or they might decide to produce it
more with machines and computers to save on labor costs. The question
involving for whom to produce is based on the buyer who decides what
they want or need and what price they are willing to pay for it.
5.
Existence of Competition
Competition prevails in capitalist economies. Competition and price
mechanism coordinate all activities of producers and consumers in an
efficient and optimal manner.
6.
Consumers are Supreme
In a capitalist economy, consumer‘s preferences guide preferences. It is
called consumer‘s sovereignty. Consumers are free to consume whatever
they like – they are the kings.
7.
Very unequal distribution of income
Under capitalism, there is right of inheritance, i.e., legal heirs will become
owners of the property after the death of the owner. This encourages
unequal distribution of income and wealth.
8.
Absence of Role of the Government
The government does not interfere in the functioning of the private
entrepreneurs. There is no central planning system. Every activity is
determined by the price mechanism.
Capitalist systems range from lassiez-faire, with minimal government
regulation and state enterprise, to regulated and social market systems,
with the stated aim of ensuring social justice and a more equitable
distribution of wealth or ameliorating market failures.
17
Merits of Capitalist Economy:
1.
Encourages Economic Activities
All individuals and firms can
follow their profit motive, which in
turn encourages economic activities
in a capitalist economy.
2.
Maximum Efficiency
Maximum efficiency is ensured
because of stiff competition. Only
those who are able to produce at
the least cost and sell at the lowest
price are able to survive in the
market and earn more profits.
3.
Dynamic Economy
There are continuous innovations and diversifications which give it a
dynamic status.
18
4.
Rapid Economic Growth
There is fast growth in output, economic growth and economic
development under capitalism. Individuals enjoy a high standard of living.
Demerits of Capitalist Economy:
1.
Unequal Distribution of Income and Wealth
Due to the unequal distribution of income and wealth, production gets
affected by the demand of the rich society rather than the needs of the poor
society. Such inequality is undesirable from moral, economical, social and
political point of view.
The society is divided into two sections—rich and poor. The gap between
the two keeps on widening with inheritance of private property. This
results in class war and exploitation of poor people.
2.
Business Instability
Since there is no role of the government, production decisions are taken by
millions of entrepreneurs. The result may be overproduction or
underproduction and business instability.
3.
Lack of Social Welfare and Consumer Exploitation
In the absence of any government interference and due to profit motive,
exploitation of workers is rampant. Also, there is a bias in favour of
monopolies which have profit maximization as the only motive.
Monopolies exploit consumers by charging higher price for lesser output.
4.
Misallocation of Productive Resources
In capitalist economies, resources are allocated where profits are maximum.
There is no place for social welfare. It generally results in misallocation of
productive resources.
19
Laissez-faire
Laissez-faire is synonymous with what was referred to as strict capitalist
free market economy during the early and mid 19th century as an ideal to
achieve. It is generally understood that the necessary components for the
functioning of an idealized free market include the complete absence of
government regulation, subsidies, artificial price pressures and
government-granted monopolies (usually classified as coercive monopoly
by free market advocates) and no taxes or tariffs other than what is
necessary for the government to provide protection from coercion and theft
and maintaining peace, and property rights.
C.
Planned Economy:
A
Socialist Economy is a planned or command economy based on public
ownership of property and social welfare motive.
Such economies have strong government control. So if someone wants to
start his own business, he would have to get permission from the
government.
Some of the socialist countries are Hungary, Yugoslavia, Bulgaria, etc.
The main features of socialist economies are:
1.
Public Ownership of Factors of Production
In a command economy, the government owns most of the industries and
companies. There is social or collective ownership of means of production
in a socialist economy. Profits earned by different enterprises go to the State
from where they are utilised for social welfare motives.
2.
No Freedom of Enterprise
In a socialist system, there is no freedom to produce any commodity. The
central authority is the government which plans and decides what, how and
20
for whom to produce according to social and economic goals set by it. If the
objective of the government is to fulfil basic needs of its people, the
production of luxury goods may not be carried out.
3.
Social Welfare Motive
Social welfare and not profit maximisation is the only basis of production
activities. Entire net earnings go to the government. A socialist economy
would thus never produce harmful goods even if their production may be
more profitable.
4.
Planning Mechanism
The central planning authority/government decides what, how and for
whom to produce. The government owns the resources and makes the
decisions as to what goods to supply to the people.
Goods are distributed on an asneeded-basis.
In
a
socialist
economic system, production is
carried out to directly satisfy
economic demand by producing
goods and services for use;
decisions regarding the use of
the means of production are
adjusted
to
satisfy
economic
demand and investment is carried out through a mechanism of inclusive
collective decision-making.
5.
No Competition
Since there is no profit motive, there is no incentive to compete.
21
6.
Absence of Consumer’s Sovereignty
Consumers are not independent to decide what to consume. They can
consume only those goods which are produced by the State. Thus no
consumer can demand a particular good unless the government wants to
provide for it.
7.
Inequalities of Income greatly Reduced
In such an economy, work is ensured to everybody. Earnings differ
according to nature of work and ability of the worker. There are hardly any
income inequalities. Economic inequalities get greatly reduced as there is no
right to private property,
8.
Complete Role of the Government
The government has complete control over the economy. The central
planning commission allocates all resources according to pre-specified goals
and objectives to attain maximum social welfare.
Merits of a Socialist Economy:
The command economy surely has its benefits:
1.
Optimum Utilization of Resources: Production takes place according to
social welfare motive and so efforts are made to develop all regions in an
economy. The problems associated with a free-market economy, such as
business fluctuations, speculation, uncertainties etc do not exist under this
system.
2.
Satisfaction of Consumer Needs: The real needs of people are satisfied in
this type of economic system-necessity goods and goods essential for health
and efficiency are supplied at nominal prices.
22
3.
Equal Distribution of Income and Wealth: There are no rich or poor in this
type of economy. Every one earns according to their needs and there is no
concept of private property, hence there is a classless society.
Demerits of a Socialist Economy:
Socialist economies suffer from various shortcomings. The more important ones
are:
1.
Incorrect Assessment by the Government: This type of economy is difficult
for the individual because it is impossible for the government to know
exactly what is best for each and every citizen.
2.
Inaccurate Calculation of Cost: Resources are in the hands of the
government. Government may not be competent to correctly calculate price
of factors of production and services.
3.
No Incentive to Work Hard or Increase Productivity: Command economies
demotivate their workers because everyone is given the same amount of
goods and the same standard of living. A hard working citizen would not
be given a chance to benefit from their extra work because they cannot
increase their standard of living any greater than it currently is and they
will make just as much as a person who exerts little or no effort. Thus,
lethargy and lack of competitiveness sets in.
4.
Bureaucratic Set-up: The socialist system has a bureaucratic set-up wherein
business units are not run efficiently since they may lack the technical
expertise, may fear public criticism and may lack motivation. Also this
system leads to unnecessary delays in decision making and thus promotes
inefficiency
5.
Concentration of Power in Government Hands: Concentration of all the
powers in one hand brings in the ills of corruption and domination.
23
A.
Rise of the Mixed Economy:
Mixed economy can be defined as a form of organization where the
elements of both capitalist economy and socialist economy are found. In
such type of economy there is the presence of private economic freedom
with centralized planning with a common goal of avoiding the problems
associated with both capitalism as well as socialism.
In today‘s times, it is not
easy to define a country‘s
economy
as
capitalist,
socialist or mixed. The role
of
government
has
increased very fast after
the Great Depression. The
country
that
was once
considered one of the best
examples of a capitalist
economy is considered as
a mixed type today. Mixed
systems offer a variety of
benefits, including free enterprise and private ownership, as well as a social
safety net and the capacity for government intervention when needed.
The main features of mixed economies are:
1.
Ownership of property both by private and public sector. Means of
production may be owned by private individuals, government or by both of
them together.
24
2.
There is freedom of enterprise in the private sector but no freedom in the
public sector.
3.
Profit maximization is the main motive for production for private
enterprises while social welfare is the main objective for public enterprises.
4.
In the private sector, price mechanism solves the basic problems of what to
produce, how to produce and for whom to produce; whereas in the public
sector, the government guides the production decisions.
5.
Competition exists but is limited to the private sector.
6.
Both freedom of occupation as well as consumer's sovereignty exists.
7.
Inequality of income exists in this economic system.
8.
Full role of the government in the public sector and limited role in the
private sector. Price mechanism plays its role in the private sector 0 the
mixed economy and decides what, how and for whom to produce. In
the public sector, the central planning authority decides what, how and
for whom to produce.
Merits of Mixed Economy:
1.
This economic system provides proper scope for full play of private
initiative and profit motive.
2.
Freedom of enterprise and price mechanism is allowed to influence the
allocation of resources and efficiency in production.
3.
Social interest and welfare motive replaces self-interest and private profit
in the public sector.
4.
Due to government‘s role in economic planning, stability and balanced
development is achieved.
25
5.
Competition between the private sector and the public sector industries
is generated to maximise productivity.
Demerits of Mixed Economy
Despite all the benefits, there may be a few demerits of mixed economy are:
1.
Fear of Nationalisation. A serious criticism against mixed economy
is that it may not remain as a mixed economy for a long time. The
public sector generally expands to such a large extent that it takes
over the private sector. Also, mixed economy cannot effectively
control the private sector industries which are outside the
government purview.
2.
Inefficiency and Corruption. Mixed economic system is also characterised
by red- tapism, high degree of corruption and absence of competition. This
leads to slowing down of economic growth, wastefulness and economic
inefficiency.
3.
Concentration of Economic Power. Mixed economies result in
emergence of modern big corporations which exploit small producers,
workers and consumers. Thus, there is concentration of economic
power in the hands of private sector, politicians and top bureaucrats.
V.
THE GREAT DEPRESSION
1.
Understanding Depression and Recession:
A depression can be described as a time when all of these things are moving in
the wrong direction. A recession is a similar time, but conditions are not so bad,
and a recession does not last as a depression. For instance, in the United States, a
recession is officially defined as any period of nine months or longer during
which the GNP does not rise.
26
An economy maybe compared to as a growing child. A child has periods of rapid
growth, and so does an economy. For an economy, these are times of prosperity.
The number of jobs rises, and unemployment falls. Business profits and wages
rise, and thus incomes rise. But sometimes a child may have periods of very slow
growth. An economy has similar times, and they are called recessions.
Unemployment rises because new jobs are not being created as fast as new
workers enter the labour force. Incomes fall slightly because profits and wages
fall slightly. For a child, periods of slow growth usually are followed by
noticeable growth. It is normally the same for an economy. But there the
similarity ends. It is possible that the growth process of an economy can be
reversed. In other words, an economy can shrink. Then the economy moves from
a recession to a depression. During a depression, unemployment is very high,
incomes fall dramatically, price of stocks usually also falls, and many business
fail.
Depressions are normally observed to behave in terms of a yo-yo-good times
followed by bad times in a regular pattern. Like a yo-yo, the economy was
always going up and down before the worldwide Great Depression of the 1930‘s
which did not fit into this theory. The experience since World War II, with no
depression and infrequent recessions, does not fit either.
2.
THE GREAT DEPRESSION – Causes and Impacts:
The Great Depression was a severe worldwide economic depression in the
decade preceding World. The depression originated in the U.S., starting with the
fall in stock prices that began around September 4, 1929 and became worldwide
news with the stock market crash of October 29, 1929 (known as Black Tuesday).
From there, it quickly spread to almost every country in the world.
27
A.
Causes of the Great Depression
The causes of the Great Depression are still a matter of active debate
among economists.
i)
Various Theories
1.
Stock Market Crash- The crash signalled the beginning of the 10-year
Great Depression that affected all Western industrialized countries.
Even after the Wall Street Crash of 1929, also known as the Great
Crash, optimism persisted for some time. Everyone tried to sell their
stock, but there were no buyers. The stock market, which had
appeared to be the surest way to become rich, quickly became the path
to bankruptcy. And yet, the stock market crash was just the beginning.
2.
Bank Failures- Since many banks had also invested large portions of
their clients' savings in the stock market, these banks were forced to
close when the stock market crashed. Seeing a few banks close caused
another panic across the country. Afraid they would lose their own
savings, people rushed to banks that were still open to withdraw their
money. This massive withdrawal of cash caused additional banks to
close. Since there was no way for a bank's clients to recover any of their
savings once the bank had closed, those who didn't reach the bank in
time also became bankrupt.
Businesses and industry were also affected. Having lost much of their
own capital in either the Stock Market Crash or the bank closures,
many businesses started cutting back their workers' hours or wages. In
turn, consumers began to curb their spending, refraining from
purchasing such things as luxury goods. This lack of consumer
spending caused additional businesses to cut back wages or, more
28
drastically, to lay off some of their workers. Some businesses couldn't
stay open even with these cuts and soon closed their doors, leaving all
their workers unemployed.
The Dust Bowl
3.
Farm Depressions- In previous depressions, farmers were usually safe
from the severe effects of a depression
because
they
could
at
least
feed
Buried machinery in a barn lot;
South Dakota, May 1936.
themselves. Unfortunately, during the
Great Depression, the Great Plains were
hit hard with both a drought and
horrendous dust storms. Years and years of overgrazing combined
with the effects of a drought caused the grass to disappear. With just
topsoil exposed, high winds picked up the loose dirt and whirled it for
miles. The dust storms destroyed everything in their paths, leaving
farmers without their crops.
Small farmers were hit especially hard. Even before the dust storms
hit, the invention of the tractor drastically cut the need for manpower
on farms. These small farmers were usually already in debt, borrowing
money for seed and paying it back when their crops came in. When the
29
dust storms damaged the crops, not only could the small farmer not
feed himself and his family, he could not pay back his debt. Banks
would then foreclose on the small farms and the farmer's family would
be both homeless and unemployed.
Dorothea Lange's Migrant Mother depicts destitute pea
pickers in California centering on Florence Owens
Thompson age 32 a mother of seven children in Nipomo,
California March 1936.
ii)
Breakdown of international trade-Many economists have argued that
the sharp decline in international trade after 1930 helped to worsen the
depression, especially for countries significantly dependent on foreign
trade. While foreign trade was a small part of overall economic activity
in the U.S. and was concentrated in a few businesses like farming, it
was a much larger factor in many other countries.
In dollar terms, American exports declined from about $5.2 billion in
1929 to $1.7 billion in 1933; but prices also fell, so the physical volume
of exports only fell by half. Hardest hit were farm commodities such as
wheat, cotton, tobacco, and lumber. According to this theory, the
collapse of farm exports caused many American farmers to default on
30
their loans, leading to the bank runs on small rural banks that
characterized the early years of the Great Depression.
iii) Debt deflation
Irving Fisher argued that the predominant factor leading to the Great
Depression was over-indebtedness and deflation. Fisher tied loose
credit to over-indebtedness, which fuelled speculation and asset
bubbles. He then outlined 9 factors interacting with one another under
conditions of debt and deflation to create the mechanics of boom to
bust. The chain of events proceeded as follows:
1.
Debt liquidation and distress selling
2.
A fall in nominal interest rates and a rise in deflation adjusted
interest rates
3.
Contraction of the money supply as bank loans are paid off
4.
A fall in the level of asset prices
5.
A still greater fall in the net worths of business, precipitating
bankruptcies
6.
A fall in profits
7.
A reduction in output, in trade and in employment
8.
Pessimism and loss of confidence
9. Hoarding of money
31
B.
Impacts of the Great Depression
1.
Riding the Rails
During the Great Depression, millions of people were out of work
across the United States. Unable to find another job locally, many
unemployed people including teenagers, older men, women, and
entire families hit the road, travelling from place to place, hoping to
find some work. They would board freight trains and crisscross the
country, hoping to find a job in one of the towns along the way.
When there was a job opening, there were often literally a thousand
people applying for the same job. Those who weren't lucky enough to
get the job would perhaps stay in a shantytown (known as
"Hoovervilles") outside of town.
The farmers who had lost their homes and land usually headed west to
California,
where
they
heard
rumours
of
agricultural
jobs.
Unfortunately, although there was some seasonal work, the conditions
for these families were transient and hostile.
2.
Economic Growth
The US economy‘s GDP fell down drastically during the 1930s.
32
USA annual real GDP from 1910–60, with the years of the Great Depression
(1929–1939) highlighted.
Unemployment rate in the US 1910–1960, with the years of the Great
Depression (1929–1939) highlighted.
3. The Global Implications of the Great Depression
The Great Depression had devastating effects in virtually every country,
rich and poor. Personal income, tax revenue, profits and prices dropped,
while international trade plunged by more than 50%. Unemployment in the
U.S. rose to 25% and in some countries rose as high as 33%.
Cities all around the world were hit hard, especially those dependent on
heavy industry. Construction was virtually halted in many countries.
Farming and rural areas suffered as crop prices fell by approximately 60%.
Facing plummeting demand with few alternate sources of jobs, areas
dependent on primary sector industries such as cash cropping, mining and
logging suffered the most.
Some economies started to recover by the mid-1930s. In many countries, the
negative effects of the Great Depression lasted until the start of World War .
33
VI.
Challenges faced by developing economies
Watch a video on ‗Why some countries are poor‘.
After having studied about the characteristics of developing economies, the main
challenges being faced by them need to be discussed. Although there are many
problems that developing economies have to deal with, some immediate
problems need to be solved at the earliest.
1.
Food Security:
FOOD SECURITY refers to the availability of food and one's access to it. A
household is considered food-secure when its occupants do not live in hunger or
fear of starvation. According to the World Resources Institute, global per capita
food production has been increasing substantially for the past several decades.
The
poor
households
are
more
vulnerable to food insecurity whenever
there is a problem of production or
distribution
security
of
food
depends
Distribution
crops.
on
the
System
Food
Public
(PDS),
Government vigilance and action at
times when this security is threatened.
Why food security?
Food is as essential for living as air is for breathing. But food security
means something more than getting two square meals. Food security
has the following dimensions:
34
a.
Availability of food means food production within the country,
food imports and the previous year‘s stock stored in government
granaries.
b.
Accessibility means food is within reach of every person.
c.
Affordability implies that an individual has enough money to
buy Sufficient, safe and nutritious food to meet one's dietary
needs.
Thus, food security is ensured in a country only if (1) enough food is
available for all the persons, (2) all persons have the capacity to buy
food of acceptable quality, and (3) there is no barrier on access to food.
The poorest section of the society might be food insecure most of the
times while persons above the poverty line might also be food insecure
when the country faces a national disaster or calamity like earthquake,
drought, flood, tsunami, widespread failure of crops causing famine
etc.
Food security must be provided by all economies so that nobody
remains hungry and also gets all essential nutrients.
What is hunger?
The sensation of hunger, a lack of food in the stomach, is universal.
Source: UN World Food Programme
35
Under nourishment is used to describe the status of people whose food intake
does not include enough calories (energy) to meet minimum physiological needs
for an active life. At present, there are 925 million undernourished people
worldwide, most of them in developing countries. Daily undernourishment is a
less visible form of hunger.
The body compensates for the lack of energy by slowing down its physical and
mental activities. A hungry mind cannot concentrate, a hungry body does not
take initiative, a hungry child loses all desire to play and study.
Source: UN World Food Programme
Hunger also weakens the immune system. Deprived of the right nutrition,
hungry children are especially vulnerable and become too weak to fight off
disease and may die from common infections like measles and diarrhoea.
Malnutrition means 'badly nourished', but is more than a measure of what we
eat or fail to eat. Malnutrition is characterised by inadequate intake of protein,
energy and micronutrients and by frequent infections and diseases. Starved of
the right nutrition, people will die from common infections like measles or
diarrhoea.
Malnutrition is measured not by how much food is eaten but by physical
measurements of the body - weight or height - and age.
36
Wasting is an indicator of acute malnutrition that reflects a recent and
severe process that has led to substantial weight loss. This is usually the
result of starvation and/or disease.
Thus we can conclude that
Food security is a situation in
which all people, at all times,
have physical and economic
access to sufficient, safe and
nutritious food to meet their
dietary
needs
and
food
preferences for an active healthy life.
2.
Housing
Homelessness describes the condition of people without a regular dwelling.
People who are homeless are perhaps unwilling but, more commonly, unable to
acquire and maintain regular, safe, and adequate housing, or lack fixed, regular,
and adequate night-time residence. The legal definition of "homeless" varies from
country to country, or among different entities or institutions in the same
country or region.
The term homeless may also include people whose primary night-time residence
is in a homeless shelter, a warming center, a domestic violence shelter or other ad
hoc housing situation. But does not include living on your own plot of land
without a house. Housing means living on your own plot of land or rented
accommodation with a regular and safe residence.
The poor and destitute must be provided shelter. Designing and constructing of
low cost shelters and safe housing facilities by the government as well as private
sector in developing countries is another major challenge being faced.
37
3.
Health
Health of a person helps him to
Street dwellers in Mumbai, India
realize his potential and the ability to
fight illness.
An unhealthy person
becomes even more poor since he
cannot work as much as a healthy
person, also he spends his income on
his
treatment.
An
unhealthy
individual becomes a liability for an
organization as well as an economy.
Improving the health status of the
population has to be the priority of
all economies.
There is a total absence of health education among the poor and the low-income
groups in the developing world. More often than not, they end up relying on
quacks. Sanitation in the form of proper drainage of dirty water, disposal of
garbage, sewage, and human and industrial wastes are issues that do not get the
comprehensive attention these deserve.
International institutions like the World Health Organization (WHO), a
specialized agency of the United Nations (UN) that is concerned with
international public health are working to provide medical help to developing
countries. The WHO's constitution states that its objective "is the attainment by
all people of the highest possible level of health.‖ Apart from coordinating
international efforts to control outbreaks of infectious disease, such as SARS,
malaria, tuberculosis, influenza, and HIV/AIDS, the WHO also sponsors
programs to prevent and treat such diseases. The WHO supports the
development and distribution of safe and effective vaccines, pharmaceutical
38
diagnostics, and drugs, such as through the Expanded Program on
Immunization. It conducts or supports health research in areas of communicable
diseases, reproductive health, non-communicable conditions and injuries,
neglected tropical diseases, health policy and systems, and other areas.
39
WORKSHEETS
Worksheet-1
1.
List the various points of differences between developed and developing
economies.
Basis
Per Capita Income
Life Expectancy
Growth of Population
Level & Nature of Unemployment
Technology
Health status (indicators)
Dependence on Agriculture
40
Developed
Developing
Economy
Economy
2.
Observe the cartoon and answer the questions that follow:
a)
Why do you think that ‗foreign immigrants‘ come to USA?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
b)
In your opinion, what type of economy do the immigrants belong?
_____________________________________________________________________
_____________________________________________________________________
41
c)
Mention some economies from where people migrate to developed countries.
_____________________________________________________________________
_____________________________________________________________________
3.
Write in few sentences how life in France may be different from life in Ethiopia.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
4.
Study the graph about Mexico:
42
a)
What do you observe about Mexico‘s rural population?
_____________________________________________________________________
b)
Why do you think the rural population is shifting to cities? What is this
process known as?
__________________________________________________________________
_____________________________________________________________________
43
Worksheet-2
I.
Features of an economy are listed below. Based on your understanding of
economic development, categorise the features into two groups—one which
belong to developed countries and the other which belong to developing countries.
Gender equality, Illiteracy, Poor health care facilities, Better technology, High Infant
mortality rate, Low birth rates, Availability of clean drinking water, Malnutrition,
New Scientific research, Vulnerability, Low growth rate of population., High Life
expectancy, Economic inequalities, Low productivity of Labour, Progressive social
outlook, Higher levels of corruption, Poor infrastructure, Absence of social security,
Higher standard of living, More opportunities
Developed Economies
Developing Economies
44
II.
Solve the crossword by using the clues provided:
9
45
Across
2.
Growth rate of population in many developing countries
4.
A developing country, India's neighbour
5.
As a country develops, the workers shift from farms to these
7.
A newly industrialized country in South America
9.
A developing country with a lower infant mortality rate than even USA
12.
An economic indicator of the level of development determining Quality of Labour
Force.
Down
1.
One of the East- Asian Tigers
3.
A developed Asian country with large exports
6.
A large percentage of the population of developed countries is employed in this
sector
8.
The standard of living of many developing countries in the African continent
10.
_____________ Kingdom. A developed European country, small in size
11.
A developing country in Asia with a large population
46
Worksheet-3
Please read the stories of the two girls placed in diverse circumstances.
Betty’s World
Betty, who is 12 years old, lives with her parents and an older brother Tom in a
suburban town in Canada. Betty‘s father works in a well established firm. Depending
on the firm‘s profit, his annual income varies somewhat, but is rarely below 145,000 US
dollars ( 145,000). Betty and Tom attend school and their mother does voluntary work
in a local school. The family live in a comfortable two-storey house.
Betty‘s parents own stocks and bonds and have a saving account in the local branch of a
national bank. Betty‘s father and his firm jointly contribute to his retirement pension.
He also makes monthly payments into a scheme with the bank that will cover college
education for Betty and Tom. The family‘s assets and their lives are insured.
They own two cars; the children attend camp each summer; and the family take a
vacation together once camp is over. Betty‘s parents also remark that her generation
will be much more prosperous than theirs. Betty wants to save the environment and
insists on biking to school. Her ambition is to become a doctor.
Dora’s World
Dora who is about 12 years old, lives with her parents and five siblings in a village in
Ethiopia. The family live in a two-room, grass-roofed mud hut. Her father grows maize
and teff on a half a hectare of land that the government has awarded him. Her older
brother helps him to farm the land. The small quantity of teff produced is sold so as to
raise cash income, but the maize is in large measure consumed by the household as a
staple.
47
Dora's mother works a small plot next to their cottage, growing cabbage, onions, and
enset (a year-round root crop that also serves as a staple). In order to supplement their
household income, she brews a local drink made from maize. As she is also responsible
for cooking, cleaning, and minding the infants, her work day usually lasts 14 hours.
Despite the long hours, it wouldn't be possible for her to complete the tasks on her own.
So Dora and her older sister help their mother with household chores and mind their
younger siblings. Although a younger brother does not attend the local school, Dora
nor her older sister has ever been enrolled there. Her parents can neither read nor write,
but they are numerate.
Dora's home has no electricity or running water. Around where they live, sources of
water, land for grazing cattle, and the woodlands are common property of the village.
Each day Dora's mother and the girls fetch water, collect fuel wood, and pick berries
and herbs from the local commons. Dora's mother frequently complains that the time
and effort needed to collect their daily needs has increased over the years.
There is no financial institution nearby to offer either credit or insurance. As funerals
are expensive occasions, Dora's father long ago joined a community insurance scheme
(iddir) to which he contributes monthly. When Dora's father purchased the cow they
now own, he used the entire cash he had accumulated and stored at home, but had to
supplement that with funds borrowed from kinfolk, with a promise to repay the debt
when he had the ability to do so. In turn, when they are in need, his kinfolk come to
him for a loan; which he supplies if he is able to. Dora's father says that his sons are his
main assets, as they are the ones who will look after him and Dora‘s mother in their old
age.
Dora‘s family income fluctuates widely. In bad years, the grain they store at home gets
depleted well before the next harvest. Food is then so scarce that they all grow weaker,
the younger children especially so. It is only after harvest that they regain their weight
and strength. Periodic hunger and illnesses have meant that Dora and her siblings are
48
somewhat stunted. Over the years Dora‘s parents have lost two children in their
infancy, stricken by malaria in one case and 'diarrhoea in the other.
Dora knows that she will be married (in all likelihood to a farmer, like her father) five
years from now and will then live on her husband's land in a neighbouring village. She
expects her life to be similar to that of her mother.
Based on the above cases, compile how the lives of Betty and Dora are different.
Basis of difference
Betty’ life
Location & type of economy
Size of family
Comforts
Mother‘s role
Family income
Education
Health status
Ownership of property
Insurance
Ambitions
Any other
49
Dora’s life
1. In what ways do you think the two girls are same?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
2. Betty‘s generation would be more prosperous than her parents. Why?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. Why do you think Betty thinks about the environment?
_____________________________________________________________________
_____________________________________________________________________
____________________________________________________________________
4. Can Dora‘s life be better than her parents, based on the circumstances provided?
Why?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
5. What can be done to change Dora‘s life?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
50
Worksheet – 4
Please tick the correct answer:
1) An economic system where the consumer has no say in deciding production
activities :
2)
3)
4)
5)
6)
a)
Traditional
b) Capitalist
c)
Socialist
d) None of the above
A Command Economy is the other name for
a)
Capitalist Economy
b) Traditional Economy
c)
Socialist Economy
d) Mixed Economy
The name of Karl Marx is associated with
a)
Capitalist Economy
b) Traditional Economy
c)
Socialist Economy
d) Mixed Economy
Private property exists in
a)
Capitalist Economy
b) Command Economy
c)
Socialist Economy
d) None of the above
Prices are determined by the interaction of demand and supply forces
a)
Capitalist Economy
b) Command Economy
c)
Socialist Economy
d) Free Market Economy
Germany is an example of
a)
Capitalist Economy
b) Socialist Economy
c)
Command Economy
d) Mixed Economy
51
7)
8)
9)
More democratic countries follow the command economy pattern
a)
True always
b) False
c)
True sometimes
d) Can‘t say
Examples of Command Economies are :
a)
Iran, India and Mexico
b) Cuba, China and Germany
c)
Iran, North Korea and Cuba
d) U. K., France and South Korea
‗Chad‘ can be considered and an example of
a)
Capitalist Economy
b) Socialist Economy
c)
Modern Economy
d) Traditional Economy
10) An advantage of socialism over capitalism is
a)
Socialism encourages efficiency
b)
Socialism encourages economic equalities
c)
Socialism encourages motivation of work
d)
Socialism encourages production of all goods
11) Which economic system displays the feature depicted in the picture given below:
52
a)
Capitalist
b) Socialist
c)
Mixed
d) Traditional
12) Due to a scarcity of resources:
(a)
Every society must undertake central planning.
(b)
The government must decide how to allocate available resources.
(c)
Some members of each society must live in poverty.
(d) Every society must choose among competing uses of available resources.
13) An economic system that is based on customs and traditions is known as:
a)
Capitalist
b) Socialist
c)
Traditional
d) Modern
14) The form of economic system that emerged after the world wars:
a)
Capitalist
b) Socialist
c)
Mixed
d) Traditional
15) The economic system sometimes also referred to as the ‗third way‘:
a)
Capitalist
b) Socialist
c)
Mixed
d) Free market
53
Worksheet – 5
Comparative Systems Worksheet
Complete the table(By searching on the web pages such as http://stats.oecd.org,
http://data.un.org
,
http://www.infoplease.com/countries.html
using
internet
facility or world book/references books)
U.S.A (Capitalist)
Life Expectancy at Birth
Literacy Rate
Infant Mortality Rate
Type of Government
GDP per Capita
Population Below
Poverty Line
GDP Composition,
Share of Primary Sector,
Secondary Sector,
Service Sector
Type of Natural
Resources
54
North Korea
(Socialist)
India (Mixed)
Percentage of Land
Being Used for
Agriculture
Growth Rate of
Population
Using the information from the worksheets consider the following questions :
a) How can the presence or absence of natural resources and arable land affect a
nation‘s economy, regardless of the types of economic system?
__________________________________________________________________________
__________________________________________________________________________
___________________________________________________________________________
b) How can life expectancy and literacy rates affect the quality of life?
___________________________________________________________________________
___________________________________________________________________________
__________________________________________________________________________
c) Do you think the economic system of a country influences the type of government or
vice versa?
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
55
d) In your opinion, are levels of development of an economy and the type of economic
system that the country works on correlated?
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
56
Worksheet- 6
1.
Observe the cartoon and answer the questions that follow:
a.
What do you mean by an Economic
System?
__________________________________
__________________________________
__________________________________
2.
Discuss
the
main
advantages
and
disadvantages of capitalism and socialism.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
3.
What alternative economic system helps in overcoming the problems associated
with capitalism and socialism? Discuss its advantages and disadvantages.
_______________________________________________________________________
________________________________________________________________________
________________________________________________________________________
4.
Though no economic system is purely capitalist or socialist in modern times,
identify broadly the economic systems that each of the following economies have:
(among capitalist, socialist and mixed)
57
Australia, Japan, India, Cuba, Germany, Vietnam, Pakistan,
Canada, Italy, Russia, North Korea, Laos, U K
Capitalist
Socialist
58
Mixed
5. Observe the cartoon. Interpret what is conveyed through this cartoon.
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
_______________________________________________________________________
59
Worksheet - 7
1.
Identify the personality in the picture. Which economic event in the world do we
associate him with?
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
_________________________________________________
2.
Who was USA‘s President when the Great Depression began?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
3.
Observe the picture. It shows Civilian Conservation Corps (CCC) workers
constructing road in the year 1933. How did `construction of road‘ help the US
economy at that point in time?
60
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
4.
What was ‗The New Deal‘? Who initiated it and why?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
5.
Mention some countries that suffered during the Great Depression.
_________________________________________________________________________
_________________________________________________________________________
61
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
6.
Observe the picture. Which incident from the Great Depression can be seen in the
picture? Which countries were affected by it?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
7.
Discuss in brief the causes for the occurrence of dust bowl phenomenon.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
62
8.
Read the extract given below and answer the questions that follow:
Ben Isaacs, who lived in Chicago during the depression, described what happened
to him: ―I was in business for myself, selling clothes on credit… But… banks closed
down overnight. We lost everything… I couldn‘t pay the rent… I sold it (the car)
for $15 in order to buy some food for the family… I would bend my head low (in
the relief line) so nobody would recognize me…‖ (The quotations in this
paragraph are from Hard Times: An Oral History of the Great Depression © 1970
by Studs Terkel, published in Pantheon Books, a Division of Random House, Inc.)
a)
Why do you think Isaacs lost everything?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
b)
Where would he bend his head low and why?
_____________________________________________________________________
_____________________________________________________________________
c)
In your opinion, how can the life of an ordinary individual change in the face
of an economic depression?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
63
Worksheet - 8
I.
Tick the correct option:
1.
2.
3.
Which of the following countries was not affected by the Great Depression?
a)
U.K
b) U S A
c)
Germany
d) India
Which of the following are very high during a depression?
a)
Incomes
b) unemployment
c)
Stock prices
d) production
The Roosevelt government‘s first step to control the situation of Depression
was:
4.
5.
6.
a)
Arresting workers
b) closing banks temporarily
c)
opening new banks
d) closing down of factories
October 29, 1929 is known as:
a)
Dark Tuesday
b) Black Friday
c)
Black Tuesday
d) Dirty Tuesday
The Smoot-Hawley Tariff Act was:
a)
imposed in USA in 1930
b) imposed in U K in 1933
c)
imposed in USA in 1933
d) imposed all over the world in 1933
During the Depression, people in USA:
a)
Stuck to their home towns
b) travelled to big cities
64
c)
7.
8.
9.
Travelled to other countries
d) travelled from place to place
The US President blamed by the American people for the Great Depression:
a)
President Roosevelt
b) President Hoover
c)
President Kennedy
d) President Nixon
The event that finally let USA get out of the depression:
a)
Roosevelt‘s restructuring programme
b) World War I
c)
World War II
d) all of the above
The measures suggested by Keynes to tide over the Depression included:
a)
Increased govt. spending
b) keep people fully employed
c)
Neither a nor b
d) both a and b
10. USA‘s GDP fell down drastically during:
II.
a)
1920s
b) 1930s
c)
1940s
d) 1950s
Based on the description of the Great Depression given in the manual, arrange the
following sentences in the correct sequence:
(a)
There were no buyers for their stocks.
(b)
Business and industry lost money due to the stock market crash as well as
bank closure.
(c)
Stock markets crashed.
(d) People rushed to the banks to withdraw their money.
(e)
Consumers began to curb their spending.
65
(f)
Investors tried to sell their stocks.
(g)
Additional businesses cut back wages and laid off workers.
(h)
Remaining banks closed down since they could not pay their customers.
(i)
Banks forced to close down since they lost money in stock markets.
(j)
Businesses started cutting back their workers‘ wages.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
III. ‗America‘s economy Sorrow and hope‘. Discuss how ‗panic‘ contributed to sorrow
for the Americans.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
66
Worksheet-9
I.
Based on the given table, answer the questions:
Infant Mortality for Selected Countries, 2007
Infant
Country
Infant
mortality
Country
mortality
Albania
20.0 Japan
3.2
Angola
184.4 Kenya
57.4
Australia
4.6 Korea, South
Austria
4.5 Mexico
Bangladesh
59.1
Brazil
27.6
Canada
4.6
Chile
8.4
China
22.1
Mozambique
New
Zealand
6.1
19.6
109.9
5.7
Nigeria
95.5
Norway
3.6
Pakistan
68.5
Costa Rica
9.5 Panama
16.0
Cyprus
6.9 Peru
30.0
67
Czech
Republic
Denmark
3.9
Poland
7.1
Portugal
4.9
4.5
Russia
Ecuador
22.1
Slovakia
Egypt
3.5
France
4.2
Germany
4.1
Greece
5.3
Hungary
India
29.8
South Africa
Spain
Sri Lanka
59.4
4.3
19.5
Sweden
2.8
Switzerland
4.3
8.2 Syria
34.6 United
Kingdom
Iran
7.1
30.1
Finland
Guatemala
11.1
27.7
5.0
38.1
United States
Ireland
5.2
Israel
6.8
Italy
5.7
6.4
Venezuela
20.9
Zimbabwe
51.1
1. Infant deaths per 1,000 live births.
68
(a)
Identify the country with highest and lowest infant mortality rate.
______________________________________________________________
__________________________________________________________________
__________________________________________________________________
(b)
What do you think about health care facilities in a country with low infant
mortality rate?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
II.
What do you understand by ―urbanization of poverty‖? Why is it not good for
any economy?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
III.
Observe the picture from the slums of Brazil Why does more population living in
slums reflect poor economic development of a country?
Slum in Rio de Janairo, Brazil
69
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
IV. Study the sub-divided percentage bar diagram showing the status of child
mortality in different parts of the world. (given under the topic, `Health as a
challenge for developing countries) Answer the following:
(a)
Which region has made a good progress in reducing child mortality?
_____________________________________________________________________
(b)
Which region comes across as one with minimum progress in terms of child
mortality?
_____________________________________________________________________
_____________________________________________________________________
(c)
What can you say about economic level of development of the region
mentioned in (b) part above?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
70
Worksheet -10
I.
State true or false. Also rewrite the false statements after correcting them.
a.
Countries that have undernourished people include Indonesia, Cambodia,
Bolivia and Ethopia.
______________________________________________________________________
______________________________________________________________________
b.
Food insecurity is directly correlated with Poverty.
______________________________________________________________________
______________________________________________________________________
c.
WHO supports programmes relating to housing problems in the world
______________________________________________________________________
______________________________________________________________________
d.
People living without a regular dwelling are known as homeless.
______________________________________________________________________
______________________________________________________________________
e.
No. of years spent with disabilities is more for people living in developed
countries.
______________________________________________________________________
______________________________________________________________________
71
II.
Fill in the blanks by choosing from words given in the box:
Food security includes the three dimensions of ____________________________
,_______________________ and __________________________. As per the UN
World Food Programme, _______ out of _________ children in developing
countries are underweight. __________________ is used to describe the status of
people whose food intake does not include the required calories. Hunger
weakens the _____________________________ and leads to children becoming
more ______________________________________________. As per UN World
Food Programme, _________________ is the world‘s No. 1 health risk. Of the
total no. of ________________________chronically hungry people, over half are in
_______________________________
and
about
a
quarter
is
in
_________________________________.
Asia and the Pacific, hunger, food, one, immune system, 925 million,
Sub Saharan Africa, accessibility, four, affordability, vulnerable to
diseases, undernourishment
III. How does ‗availability of food‘ contribute to productivity of an individual?
________________________________________________________________________
________________________________________________________________________
IV. How is health related to poverty?
________________________________________________________________________
________________________________________________________________________
72
References and Links
1.
Websites and Links
www.ncert.nic.in/NCERT/textbook.html
www.google.co.in
www.youtube.com
www.en.wikepedia.org
www.undp.org
www.undp.org/mdg/
www.worldbank.org
wdr2011.worldbank.org
http://library.thinkquest.org/03oct/00921/typesofeconomies.htm
http://www.ehow.com/facts
www.worldscibooks.com/etextbook/4438/4438-case1-1.pdf
http://www.nationsonline.org/oneworld/third_world_countries.htm
Encyclopedia of World Geography)
http://www.english.illinois.edu/maps/depression/about.htm---University
of illinois.
http://history1900s.about.com/od/1930s/p/greatdepression.htm
http://graphics8.nytimes.com/images/2008/09/22/timestopics/greatdepression_395.jpg (picture)
http://www.econedlink.org/lessons/index.php?lid=322andtype=educator
73
http://ecedweb.unomaha.edu/ecedweek/lesson2.htm
2.
Books:
a)
Indian Economic Development (Class XI) by Dr. Deepashree
b)
Planning, Growth and the Economy by S.K Ray
c)
Indian Economy by Ruddar Datt and KPM Sundharam
d)
Indian Economy by S. K Misra and V.K Puri
e)
The Economics of Development and Planning by M.L Jhingan
f)
Economics – A very short introduction by Partha Dasgupta
g)
Economic development by Todaro and Smith
74
CENTRAL BOARD OF SECONDARY EDUCATION
Shiksha Kendra, 2, Community Centre, Preet Vihar, Delhi-110 092 India