# ~Introduction to economics~

## The hockey stick of growth

* Malthusian trap
* Industrial revolution
* Great Depression

### Agricultural revolution (11.000 years ago)

* Northern China; Mexico; Eastern US; Africa; New Guinea; Southeast
Asia
* Slow but revolutionary

## GDP per Capita (measuring economic Development)

* Gross Domestic Product per Capita(per number of residents)——> to
measure economic development (either how much stuff is being
produced or how much money I’m making)
* Gross National Product (GNP)—->S Similar to GDP, but accounts for
income made by residents outside economy

### GDP between 1000-2000

* 1000: The world is quite poor and the GDP equally distributed
* 1500:In Italy becomes wealthier but essentially the rest remains
the same
* 1700:Most the world is still poor, but England starts to grow with
Italy
* 1820:Europe has gone wealthier; under the US colonies become
independent countries
* 1950:The US/Northern Europe are much wealthier, up to 2008; the
gap between India and wealthy countries narrows
* After the fall of communism Economy is not that flat anymore and
poverty tends to get down
* N.B Countries that rely on natural resources are very sensitive
to fluctuations such as Qatar relied on oil

### World in 1500

* Very few developed civilisations (e.g Japan, Korea, China,
Indonesia etc. China being the wealthiest)
* Columbus discovers America and that changes the development and
reduces the isolation
* 70% of world’s population living on same 42.5 miles
* Farming wasn’t developed enough in order to support populations
* The places who tend to be the poorest historically are the
wealthiest in the modern day and vice versa (e.g Morocco’s economy
declined)

### World manufacturing

* China was the biggest manufacturer in 1750, but that changes with
the Industrial Revolution resulting in a decline
* An increase results in UK after 1880

## Globalisation
* Growing into connections between the economies of different
countries (e.g exports and imports)
### Globalisation from an historical perception
* Globalisation is not a modern phenomena:
* The first Globalisation if often dated as starting with Columbus
(15th-17th Century
* Three waves of globalization + deglobalization nowadays
* 1500: very little of world production is traded nationally but
between 1500-1700 it goes up
* as the world grows it tends to become more globalised
* between the first and second WW, GDP changes radically most due to
political changes, people become very protectionist and close their
borders
* Before 1500, trade is mostly active in India, China and Africa
* In the 13th century trading routes were over lapping
* Europe is right on the edge of this trading system because it
doesn’t have much to sell (slaves, spices, materials)

### The first globalisation

#### Age of discovery: Huge profits, mercantile expansion, rapid
establishment of trading network; rapid change in the history of
mankind
* Marks the discovery of new markets and countries such as precious
metals
* Corn and potatoes arrive in Europe changing consumption patterns=
fine goods such as sugar and tobacco. This is because products from
China become much more accessible
* Also important changes in shipbuilding take place, expanding the
distance that can be traveled
* Improvements and conquests in navigation (people understand what
the world looks like)
* Mercantilism: economies are intervening in order to help their own
countries, benefitting from trade (e.g precious metals)
* Hence, trading posts are established who will contribute to the
expansion of the European Empire (through modern fortification)
* As a result, by 1800, Europe (many European countries) controls
35% of the world surface
* However, not all explorations were European, but never established
a permanent presence (e.g Persian Gulf, Asia, Islamic world)

### Globalisation pre-1800

* Geographical features may explain why it was Europeans emphasized
expansion(europe’s fragmentation; access to Atlantic; didn’t fight
Mongols)

## How does economics tackle questions?

* Economics studies why things happen
* It is fundamental to distinguish between cause and effect—>
Correlation is ==not== causation(NB)
* Tools used in this research are either theoretical or Empirical
* Theoretical use mathematics to provide simplified version of
human interactions
* Empirical methods/econometrics tests wether there are casual
relationships between variables
* It also important to distinguish between Exogenous and endogenous
* Exogenous: smth outside the system were looking at (determined
outside the model in order to suggest a casuality or correlation)
* Endogenous: smth inside the system (determined between the
model, it makes it quite hard to determine a correlation or
casuality)