ay in the 1800’s. This revolution dramatically changed economic activities. Huge numbers of people were no longer needed as food producers. Many moved from farms to cities to find work in the new factories that were springing in there. Cities became the focus of economic activity during the Industrial Revolution. Urbanization shifted the population from the countryside to the cities. Cities that were built on manufacturing grew and expanded. By the beginning of the 1900’s, more and more people were working jobs not related to agriculture and manufacturing. This created the different types of industries (primary, secondary, tertiary). These jobs were created to provide consumers in the cities with services such as entertainment, shops and stores, banking and insurance.
All these revolutions and changes in economic system have brought us to today’s economy. There are 4 types of economic systems: traditional, command, market and mixed. Economic systems is the way economy works. The 4 basic resources to an economy are land, labor, capital, and technology. Land refers to all natural resources that we use to make something such as minerals, energy, water, or land. Labor refers to human energy, efforts and talents that go towards making something. Capital is money— money invested in machinery, buildings and the like. Technology includes all resources that are not natural resources, such as scientific knowledge which allows decisions to made. These are the world’s economic systems: 1) Traditional economy is an economy in which decisions are made based on what has been done in the past. People organize their economic choices by following their religion, custom and tradition. An example of how traditional economy worked would be if there was a new road to be built, elders might be consulted and the decision would be made according to the tradition of the people. 2) Command economy is an economy where decisions are made by a central authority, such as dictator or a government. Citizens are required to carry out these decisions with few personal choices. An example would if a new industry was to built there, people in power decided if it fit into their plans and if it met their needs. The citizens of the country would have to carry out these commands. A country that follows this economic system is North Korea. 3) Market economy is an economy where decisions are made by all members of the society based on their own needs and desires. Citizens make their own choices through buying and selling in the market place. If a factory were to be constructed, decisions would be made by a corporation, based on whether or not profit could be made. The government might or might not be involved. A country that uses this type of an economic system is the United States. 4) In mixed economies decisions are made within a system that has aspects of both market and command economies. Governments, businesses and individuals are all included in the making of the decision. So, if there was an automobile manufacturing industry to be built there, the decision to construct a road would be made after discussions among governments, businesses and consumers. The decision would rest in the hands of any of these groups. Canada is an example of a mixed economy.
Economic sectorsThe economy includes several sectors (also called industries), that evolved in successive phases.
In modern economies, there are three main sectors of economic activity:
- Primary sector: Involves the extraction and production of raw materials, such as corn, coal, wood and iron. (A coal miner and a fisherman would be workers in the primary sector.)
- Secondary sector: Involves the transformation of raw or intermediate materials into goods e.g. manufacturing steel into cars, or textiles into clothing. (A builder and a dressmaker would be workers in the secondary sector.)
- Tertiary sector: Involves the provision of services to consumers and businesses, such as baby-sitting, cinema and banking. (A shopkeeper and an accountant would be workers in the tertiary sector.)
- Quaternary sector: Involve