Economics / Notes Grade 10 2022

BOHLABELA DISTRICT
ECONOMICS NOTES
TOPIC 8: GROWTH DEVELOPMENT AND GLOBALISATION
GRADE 10
2022

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Economics / Notes Grade 10 2022

GLOSSARY
CONCEPTS DESCRIPTION
1. Self-Sufficiency To be able to produce enough goods for your own consumption
2. Nomadic When people move from pace to place for food, water of pasture.
3. Barter Exchanging one good for another one of more or less the same
value.
4. Trade When communities/countries buy and sell from each other.
5. Specialization When a business/country focus on the production of a certain product
or group of products, in order to become more efficient.
6. Mercantile law It is a rules and regulations that govern commercial transactions
between people, firms and governments.
7. Industrialization A shift to powered, special purpose machinery, factories and mass
production.
8. Globalization The world-wide interaction and integration among people, companies
and governments worldwide.
9. Economic Growth 9. Economic Growth An increase in the amount of goods and
services produced in a country.
10. Economic An improvement in the living conditions and lifestyle of people.
Development

EARLY ECONOMIC DEVELOPMENT AND EMERGENCE OF TRADE

UNIT 1: SELF-SUFFICIENT AND DEPENDENT ON TRADE
 The earliest humans were nomadic hunters.
 They were self-sufficient and dependent on agriculture.
 In early times, communities gathered fruit and nuts and hunted their own animals to eat,
making them self-sufficient.
 Later, farming of cattle and crops enabled people to survive.
 People started to specialize and producing one single commodity.
Bartering, trade and the emergence of money:
 Due to specialization of specific tasks, people started to produce a surplus of what they
needed.
 People started to barter (one good was exchanged for another good), to swap items e.g.
swapping meat for grain.
 This was the first form of trade.
 There was no formal means of payment.
 Problems occurred and a primitive form of payment was developed.
 The first means of payment was gold, silver, beads, cowry shells, etc.

UNIT 2: EVOLUTION OF MARKETS (Possible Essay)

Surplus production, trade and transport development:
• People traded surplus production either by bartering or with the use of money.
• In order to move goods from place to place, animals were used, and roads and vehicles
were developed; ships / boats for transport over water.
• Travelling was risky due to threat of robbery; protection was needed.
 Producers started to specialize in a specific area of manufacturing.
 Increased specialization lead to surplus production.

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Economics / Notes Grade 10 2022

 Surpluses lead to trade and transport.

 The needs of the people became diverse which leads to an increase in the demand for
goods and services.
 Trade increased nationally and internationally.

Growth of towns and cities:

• Towns developed in strategic locations where people could meet to trade.
• Governments emerged, improving infrastructure and security.

Specialisation of labour and the emergence of guilds:

• Clothing started to be worn and housing was developed.
• Crafters became important to make clothes and build.
• Crafters’ guilds emerged to support the crafters by deciding on prices and wages and
supervising training / providing tools.

 Ruleson how to conduct their business became law. This is known as Mercantile Law.
 New forms of ownerships came into existence e.g. sole proprietors, partnerships,
companies, corporations.
Technological progress:
• Wheel (8000 BC)
• Printing Press (1400s – Gutenberg)
• Power and electricity (1700s - Industrial Revolution)
• Internal combustion engine (1800s) > cars and aeroplanes
• Electric telephone (1876)
• Electronic goods and computers (20th Century)
• Innovations and inventions that were related to economic activities of the time include the
following: mining, navigation, printing, architecture.

Growth of money and forms of saving:

• Banks
• Shares
• Present day: savings accounts, unit trusts, retirement annuities, shares.

UNIT 3: GOVERNMENTS AND THE REGULATION OF MARKETS (Possible Essay)

State involvement in trade:
• Law and order: rulers use power to protect citizens which creates a safe environment for
the continuation of trade.
• Wealthy individuals and government join forces and they back the discovery voyages.
• Government involvement in the market grew because governments benefit from taxes,
tariffs, custom duties, etc.
Influence prices and quantities in market:
• Responsibility of states to supply certain goods and services e.g. heath care and
education.
• States determine which goods are illegal e.g. drugs.

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Economics / Notes Grade 10 2022

Taxation and mobilization of finance for investment in infrastructure:

Taxation:
• Taxes were raised to finance the activities of the state
• The common taxes that were raised were:
• Direct taxes: poll taxes, income taxes, inheritance tax, land and property taxes.
• Indirect taxes: excise taxes, toll tax, custom duties, sales tax.
Mobilization of finance for investment in infrastructure:
Infrastructure refers to:
• Physical infrastructure such as roads, ports, government buildings, water supply, and
electricity supply, sewers, military installations,
• Social infrastructure such as schools, hospitals.
• Governments finance infrastructure projects through collecting taxes and by borrowing
money from banks if they have a budget deficit and through private business financing.
• Lending interest rates are usually lower for states than businesses.
• Citizens pay taxes to states to supply infrastructure.

Comparative economic systems:

• Capitalism: state provides basic security services and individuals / businesses provide
everything else e.g. Victorian England.
• Socialism: State provides all needs; individuals work for the state which decides what /
how many and for whom goods are produced e.g. USSR and Cuba historically.
• Mixed economies: a mix of capitalism and socialism e.g. South Africa.

Public finance and the emergence of ideas about economic policy:

• In democracies, political parties express how much tax they will expect, and allocate
taxes.
• Citizens vote for the leader / party with the economic policy they prefer.
• Majority pay less taxes but have more needs.
• Problem of income inequality within countries and between countries.

UNIT 4: INDUSTRIAL DEVELOPMENT (Possible Essay)

Manufacturing:
• Using machines, tools and labour to make goods for sale or use
• Putting-out system: work allocated to specific households or cottages to bypass guilds
(1400s – 1700s)
Technological progress, the mobilisation of energy and the mechanisation of production:
• Industrial Revolution (1750 onwards)
• Steam power replaced muscle power
• Production moved from cottages to factories
• Factories were built close to coal mines
• Factories needed to be large, to make the investment in capital machinery worthwhile
• People left homes to work in factories
• Cities with housing and factories were developed around coalfields
• English system followed initially: one worker made entire product (time consuming)

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Economics / Notes Grade 10 2022

• American system: semi-skilled labour used machinery to make identical, interchangeable

components of an article; all the components would then be combined to make the full
article (division of labour)
• Industrialists improved mass production
• Assembly line (Henry Ford, 1908, Model T Ford car)
• Time and motion studies: Frank and Lillian Gilbreth studied efficiency of movement 1920’s
> lean production
• Just-in-time (JIT) manufacturing aimed to keep as little work-in-progress parts and raw
materials on hand
• Increases return on investment (ROI) by cutting waste
• Mechanisation: use of machines or robots run by computers to do certain tasks.
Urbanisation and migration:
• People had to leave homes to live near factories > development of cities (called
urbanisation)
• In 1950, 14,7% of Africans lived in cities
• By 2015, 45,3 % of Africans lived in cities (estimate)

UNIT 5: THE EVOLUTION OF ECONOMIC INSTITUTIONS

Limited liability companies:
• With increased trade, people grouped together to finance bigger investments
• Companies continue to exist even if stockholders die
• People could invest in companies by buying and selling shares
• At first, shareholders were personally liable for debts up to the value of their investment in
the company
• In 1855 joint stock companies received limited liability

South African companies fall into two categories:

• Public Limited Companies – shares are traded on Stock Exchange
• Name ends in “Limited”
• Private Company – shareholders invest money to buy stock, but shares are not traded
publicly on the Stock Exchange. If a shareholder wants to remove his or her investment,
it has to be offered to the other shareholders first.
• Name ends in “Property Limited”

Labour unions:
• Were needed to prevent exploitation of workers by employers
• First Trade Union in South Africa (1881)
• Miners collectively formed unions (mostly English and European)
• Many Boer farmers looked for mining work following Anglo-Boer War (ended 1902) and
subsequent drought.
• Trade unions protected the jobs of Europeans
• Trade Unions only had white members
• Training for better paid jobs limited to trade union members
• South African National Congress (SANC) formed 1912 to empower Black workers
• First strike by Black workers (1918)
• Post 1994 democracy, trade unions functioned normally.

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Economics / Notes Grade 10 2022

Financial institutions and the emergence of joint stock companies:

Banks
• Ancient banks were temples where goods were stored
• 3rd Century - letters of credit issued to Persian traders
• 9th Century - early form of cheques
• 14th Century (Renaissance Italy) - banks started to conduct business as they do today.
Insurance firms
• Began with Chinese and Babylonian traders offering financial protection if goods were lost
in transit
• Ancient Greeks and Romans had benevolent societies to pay funeral costs in case of
death
• Guilds of the Middle Ages also paid for funerals
• Present-day example: Lloyds of London
Emergence of joint stock companies
• People pool their investment money via financial institutions into joint stock companies
• Joint stock companies revive capital for new ventures
• Individuals benefit from the profits.
Globalisation and international economic co-operation
• Countries offer different resources e.g. some countries offer cheap and well-trained
labour, others have plentiful
• and cheap natural resources and some countries offer large markets
• Each country contributes their part (called globalisation).