LESSON 9

Economic
Institutions
UNDERSTANDING CULTURE, SOCIETY, AND POLITICS
Economic Institutions

A company or an organization that deals

with money or with managing the
distribution of money, goods, and
services in an economy.
• Reciprocity
Reciprocity is a form of gift
exchange between two parties
wherein return is expected after
product or gift giving (Parry, 1986).
3 TYPES OF RECIPROCITY

1. GENERALIZED RECIPROCITY
• undertaken by closely related people.
This type of reciprocity is more
gesture that expresses personal
relationships than an economic
transaction.
3 TYPES OF RECIPROCITY

2. BALANCED RECIPROCITY
• a transaction between two distantly related
people; the giver expect something in return,
although it does not have to be done
immediately.
3 TYPES OF RECIPROCITY

3. NEGATIVE RECIPROCITY
• this transaction is
undertaken with people
who are considered outsider
of the group.
Transfer Payments
A transfer payment is a one-way
payment to a person or organization
which has given or exchanged no goods
or services for it. This contrasts with a
simple "payment," which in economics
refers to a transfer of money in exchange
for a product or service.
3 TYPES OF TRANSFER
PAYMENTS
• WELFARE SPENDING
• PUBLIC SERVICES
• STATE INVESTMENT
 WELFARE SPENDING
It includes spending on a range of things,
such as looked-after children and long
term care for the elderly, the sick and
disabled.

TYPE OF TRANSFER PAYMENTS

 PUBLIC SERVICES
A public service is a service which is
provided by the government to people
living within its jurisdiction, either
directly (through the public sector) or by
financing private provision of services.

TYPE OF TRANSFER PAYMENTS

STATE INVESTMENT
local and state governments are
investing directly in local businesses
through economic development
programs, which make loans to or
investments in local enterprises, and
through the active targeting of
pension fund monies to support
businesses within their regions.

TYPE OF TRANSFER PAYMENTS

Redistribution

the act of thegovernment to distribute

income from the wealthy businesses and
citizens to the less wealthy (Mares,2014).
MARKET
MARKET
TRANSACTIONS
TRANSACTIONS
PURCHASES
Buyer and seller interact
withone another to
exchange goods for an
amount ofmoney (Arcinas
& Mactal, 2016).
LOANS
Loans are money advanced to a
business with an interest charge that
must be paid and returned at some
point in the future (Peavler, n.d.)

LOANS (MORTGAGE)
Loans are money advanced to a
business with an interest charge that
must be paid and returned at some
point in the future (Peavler, n.d.)
BANK ACCOUNTS
MARKET AND
STATE
 MARKET
A system of private ownership and enterprise that acts
based on their own private and self- interest
(Schmalensee, 2013).
DRIVE

STATE
The governing body of the society (Arcinas
& Mactal, 2016).
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 MAJOR ECONOMIC
SECTORS
PRIMARY SECONDARY TERTIARY QUATERNARY

involves the This group is • Known as the service based like

extraction or involved in the service the tertiary sector,
harvesting of processing of industry but it entails the use
resources directly finished products • provides of high technology
from the Earth from primary services to to produce, retrieve,
industries the general store and distribute
population & information.
to businesses
 PRIMARY
Cotton is grown and picked on a
cotton farm

SECONDARY
Cotton is processed to cloth, which
is, in turn, sewn in to clothing.
 TERTIARY
Cotton clothes (eg jeans, shirts etc)
are sold in high street shops.

QUATERNARY
Research is carried out in to new
ways of processing or growing
cotton. e.g. organic cotton.
Thank you for listening!

REMINDER/ ACTIVITIES