"Mail Transportation" (1938) by Fletcher Martin, a mural in the San Pedro, California Post Office.
If you were to judge by the many measures of economic development discussed in the Economic Development pages of this course, you might come to the conclusion that the only things economists care about are the things we consume and the things we make. This is not entirely true, but our labor and our consumption patterns are both more easily measured than, say, our level of happiness or sense of fulfillment, so we tend to measure them a lot and draw conclusions about happiness and fulfillment from them.
Work is, of course, fundamental to human experience and is inseparable from consumption (and perhaps from happiness and fulfillment). In the third chapter of Genesis, Adam (the first man) is confronted with this most fundamental reality of the human condition:
. . . Cursed is the ground because of you;
in toil you shall eat of it all the days of your life;
thorns and thistles it shall bring forth for you;
and you shall eat the plants of the field.
By the sweat of your face
you shall eat bread
until you return to the ground,
for out of it you were taken;
you are dust,
and to dust you shall return.” (Genesis 3:17-19 NRSV)
Unless we work, we do not eat. Nor do we go to the movies, watch TV, drive cars, go to school, or do any of the myriad other things that come under the category of consumption. Working and consuming are inseparable. By the sweat of our faces, we drink our lattes. By our toil, we pay our bills.
The first chapters of Genesis reflect, of course, an ancient world view. Almost all labor was direct: planting and harvesting, turning clay on the wheel to make pottery, spinning flax to make linen. There are still many millions of people in the world who make their livings this way—growing food for their own households and making all or almost all of the things they need with their own labor.
Most of the people reading these words, of course, this kind of self-sufficiency is completely alien. We get our Wheaties from the grocery store, while our dishes, clothes, cars, and computers are made in distant factories by people we are never likely to meet. Even farmers buy their food and fiber in stores (or online). The connection between work and consumption is not broken, but the relationship has become complicated.
In the mid-20th century, economist Allan Fischer suggested that, however big and complex the global economy had become, it had only three basic sectors:
A Primary Sector make up of farming, fishing, mining, all of which are focused on extracting raw materials from the earth and sea.
A Secondary Sector which takes the raw materials provided by the Primary Sector and turns them into finished products.
A Tertiary Sector which does not “make” anything as tangible as a car or a ginger snap, but provides services either to consumers or to the primary and secondary sectors. Trucking companies are part of the tertiary sector, as are entertainers, physicians, and politicians.
More recently, economists have argued for a Quaternary Sector which would includes industries that create and manipulate knowledge. These might include scientists, computer programmers and teachers.
In least developed economies, most of the economic activity takes place in the Primary Sector: traditional farming practices, fishing, lumbering, and mining.
As an economy becomes more complex, the production of raw materials becomes more efficient and more jobs are created in the manufacturing sector—turning those raw materials into finished products and creating more jobs for truckers, restaurant workers, and other members of the service (or tertiary) sector. Most countries employ people in all four sectors, but as an economy develops, the tertiary and quaternary sectors begin to dominate. A few countries like Singapore have almost no raw materials (and with a land mass of 281 square miles, very little real estate either). Yet Singapore has the seventh highest per capita GDP in the world, and ranks ninth in the Human Development Index (HDI). If you have seen the movie Crazy Rich Asians, you know that there are some exceedingly wealthy people in Singapore. Singapore’s wealth is built on two foundations. In the Secondary Sector the manufacturing and export of electronic components and the refining of petroleum products creates about half of the nation’s income, while providing financial and other services creates much of the rest.
Another thing that makes countries like Singapore successful has been their ability to invest the wealth they create. Whenever you get paid for your work, you have a choice of what to do with your money. You can spend it all on your immediate consumer needs—on food and housing—and on whatever luxuries might be important to you. But, if you are able to take some of the money you make now and, instead of spending it, invest it in something that will create more wealth in the future, you have turned your money into capital and have become a capitalist. If you do it well, you might even become a wealthy capitalist.
Creating capital out of money can begin quite small. Simply putting ten or twenty percent of your income into a long term savings account, or into stocks (which makes you the owner of a tiny percentage of a corporation), will not necessarily make you wealthy, but it will give you a much better shot at wealth than you would have by consuming your wealth day by day, or even by putting it under your mattress where it will likely lose value through inflation.
Types and patterns of commercial agriculture
Types and patterns of subsistence agriculture
Types and patterns of manufacturing
Types and patterns of services
Global Systems
Barriers to economic development
location
social conditions
foreign debt
disease
political instability
Communication advantages:
print, radio, television
internet
social media
Dependency Theory
Economic advantages:
labor supply
natural resources
coastal location
Foreign direct investment
Transnational corporations
Transportation advantages:
road
rail
shipping/ports
airports
World Bank