Economic History key terms

‘First industrial revolution’

transition to industrial society - laid foundations for modern economic growth through increased productivity of labour and radical shifts in society

National income per capita

measure of a country’s standard of living - calculated by dividing total national income by population → indicates avg income earned by each resident of a country

National output per capita

AKA GDP per capita

measure of country’s avg income - calculated by dividing country’s GDP by population → indicator of standard of living + often used to compare living standards btwn diff countries (or over time)

GDP

gross domestic product - indicator that measures total monetary value of all final goods/services produced within a country’s borders in a specific time period

reflects the size + health of a country’s economy

productivity

measure of how efficiently resources (e.g. labour/capital) = used to produce goods + services

key aspects: output/input, efficiency, importance, determinants, types of productivity (e.g. measured at diff scales)

benefits of productivity growth = economic growth, higher living standards, increased income (for workers/businesses)

demographic transition

shift in population patterns from high birth + death rates to low birth + death rates

linked to development, impacts resource allocation, labour force participation, + overall economic output

key economic impacts: reduced dilution of capital (more resources per capita available = potentially boosting economic growth), inc investment in human capital (inc quality > quantity of children - education + skills), shifts in age structure

agriculture revolution

increase in amt of grain that can be produced from a given area of land sown w a particular crop

largely driven by technological (e.g. seed drill) + organisational (e.g.crop rotation system) changes

industrial enlightenment

refers to close relationship btwn scientific knowledge + technological innovation during IR

highlights how scientific understanding was applied to develop practical technologies - leading to rise of industrialisation

Joel Mokyr

‘useful knowledge’

(mokyr) - describes the body of scientific + practical knowledge that drives economic + technological advancement → encompasses both theoretical and practical aspects

according to mokyre this is essential for understanding + manipulatng the natural world)

energy revolution

wrigley

transition from wood etc to coal as an energy source - broke energy barrier of limited ‘energy budget’

argued organic (pre-industrial) economies could only capture tiny amt of sun’s energy - this inc w the enrgy revolution → source of energy

organic economy

pre-industrial economy, according to wrigley

impressionist vs revisionist

impressionist - focuses on subjective/nuanced/incomplete nature of hisotrical economic events

revisionist - more critical/analytical approach seeking to challenge established narratives/understandings

geometric growth

AKA exponential growth

compounding effect of growth

arithmetic growth

increase that occurs at a constant rate over time

little divergence

evidence of NW Europe (e.g. England/hollan) diverging from rest of Europe pre-IR

Suggests LT inc in living standards → IR as a continuation of trends already in place?

great divergence

Pomeranz

Global divergence after 1800 - superior growth in W Eur - pulled away from other regions (Africa/Asia/etc)

the ‘Great Moderation’

Period of unusually stable macroeconomic activity, primarily in the US from mid-1980s to ~2007

Characterised by low + stable inflation, steady econ growth + reduced volatility in key macroeconomic variables

general purpose technologies

transformative technologies w wides[read + lasting impacts on entire economies

charaterised by ability to be applied across various industries/sectors - lead to new innovations/changes in how people live + work

e.g. steam engine, electricity, information technology

technology waves (Kondratieff waves)

LT econ cycles driven by tech innovation - leading to periods of prosperity + disruption

cycles lasting ~50-60 yrs = hypothesised to be caused by the bunching of basic innovations that create new industrial sectors

each wave characterised by specific technological mode that transforms the economy - impacts production methods, energy consumption + various aspects of society

radical vs incremental innovation

radical - fundamentally new products/processes etc

incremental - small + continuous improvements to existing ones (building upon existing foundations)

innovation rents

early profits from introducing/adopting new technology/innovation

patents

legal document that grants an inventor exclusive rights to an invention for a specific period (usually around 20 years) - prevents others from making/using/selling invention without their permission

rival goods

those where consumption by one person prevents another person from consuming it at the same time

e.g. food/clothes/car

if one person eats an apple, the other can’t

excludable goods

one where a producer can prevent individuals from consuming it if they don’t pay for it

e.g. tickets (payment for entry) or products w price tags

e.g. can only have apple if buy it

complementary investments

when spread of one technology can foster the spread of another

e.g. use of steam engines for looms in the textile industry

limited liability

legal structure where the owners of a business/project are only responsible for debts/liabilities up to the amount they have invested → protects personal assets from business losses

isocost lines

represents all possible combinations of two inputs (e.g. labour/capital) that a firm can purchase with a given total budget

codified knowledge

explicit, formal + readily transferable - often found in documents/systems

tacit knowledge

personal, intuitive + difficult to articulate/share, requiring experience + interaction

endogenous growth

suggests econ growth stems from internal factors within a system rather than external ones like technological advancements

emphasises role of human capital/innovation/knowledge as key drivers of growth

contrasts w neoclassical models which treat tech progress as exogenous

colonialism

‘domination of a people/area by a foreign state/nation’ - ‘practice of extending + maintaining a nation’s political + economic control over another people/area’

imperialism

‘the policy, practice, or advocacy off extending the power + domination of a nation’

settler colonialism

large No. of people settle in a region, displacing/subjugating/exterminating indigenous people + build own schools/churches etc

exploitation colonialism

small No. of colonisers exploit the region’s natural resources OR labour - often use indigenous people as slaves or pressure them to work

surrogate colonialism

colonial power supports the settlement of a non-native group in a region with an indigenous population

internal colonialism

one part of a country controls/subjugates another part of the same country

preferential trade agreements (PTAs)

grant certain countries/regions special treatment (e.g. lower tariffs/reduced trade barriers) for imports from specific partners

differs from MFN (most favoured nation) principle which requires all trading partners to be treated equally

labour productivity

measures output per unit of labour input - e.g. output per worker/per hour worked

multifactor productivity (MFP)

measures output per unit of combined inputs, by accounting for both labour + capital

Catch-up industrialisation

idea that developing countries have higher growth rates bc of factors like readily available technologies (don’t have to pinoeer themselves) and investment opportunities

inelastic/elastic demand

inelastic demand - a product’s quantity demanded doesn’t change much, regardless of price changes

elastic demand - demand means the quantity demanded is highly sensitive to price changes

structural transformation

transition from africultureal to manufacturing/service sectors

light vs heavy industries

light - smaller-scale operations requiring less capital, produce goods for consumer markets → e.g. electronics, textiles, packaging

heavy = large-scale production w high capital investment, goods produced are often used as inputs for other industries → e/g/ construction, steel, energy

isolationism

(as an economic polocy) - a nation’s stance of minimising international economic interactions + seeking self-reliance

limiting foreign trade/investment/other economic engagements to protect domestic industries + create a self-sufficient closed economy

(opposite of globalisation + internationalism)

‘Gun Boat Diplomacy’

foreign policy that is supported by the use or threat of military force

marginal product (MP)

the change in ouput as a result of one additional unit of input being added to production

feudal economy

system where economic activities were heavily influenced by the lord’s estate with the landlord holding a monopoly on land etc

very hierarchical with hereditary status

autarky

aka economic self-sufficiency - country aims to be self-sufficient in all/most aspects of its economy (including trade)

focus on producing goods/services within its own borders

market integration

process of connecting previously separate markets for a particular product or service inco a single, larger market

removing barriers e.g. tariffs/quotas/other restrictions which previouslt limited trade btwn markets

goal = to create a more efficient + competitive environment by allowing for greater flow of goods/services

gravity model of trade

nations close to eachother trade more + bigger economies also trade more

think: when trade costs decrease, then trade increases

gold standard

system of defining domestic currency to a fixed amount of gold

exchange rate stability helps trade - less price uncertainty

total factor productivity (TFP)

measure of productive/operational efficiency - measures how much output can be produced from a certain amount of inputs

economic concept that describes the portion of a company’s increased output that cannot be explained by increased capital/labor inputs

GATT

General agreement on tariffs and trade

containerisation

system of freight transport used in sea shipping which has reduced transport costs of moving thousands of goods across the globe → standardised container system

import substitution

economic policy where a country encourages the domestic production of goods that were previously imported, aiming to reduce reliance on foreign goods and promote local industries

‘place premium’

wage premium for comparable job in 2 different countries

PPP

purchasing poower parity

measure of price of specific goods in different countries - used to compare absolute purchasing power

chain migration

migration process where immigrants from a specific area follow others from that same area to a particular destination

few pioneers, then others follow if succesful → have contacts/help/jobs upon arrival bc of connections

opportunity cost

the value of the next best alternative that is forgone when a choice is made → what you give up to get something else

e.g. if a company chooses to invest in a new manufacturing plant, the opportunity cost is the profit they could have earned by investing in a different project, like a research + development initiative

foregone earnings

represent the difference between an investment’s actual earnings and the earnings that could have been realised had there been no fees

so, they are the investment capital that the investor spent on investment fees

variable cost

expenses that change directly with the level of production or sales of a business → costs that change as the volume changes

unlike fixed costs which remain constant regardless of output

economies of scale

cost advantages a business gains by increasing its production while lowering per-unit production costs → when production becomes more efficient

leapfrog technologies

idea that countries which have poorly-developed technology/economic bases can move themselves forward rapidly through the adoption of modern systems without going through the intermediary steps

LLR

lender of last resort ?? - has the responsibility of preventing panic-induced collapses of the money stock