Economics / Notes Grade 10 Nkangala District/2024

ECONOMIC PURSUITS (PAPER 1)

TOPIC 8: GROWTH, DEVELOPMENT &

GLOBALISATION

GRADE: 10

YEAR: 2024

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 Economics / Notes Grade 10 Nkangala District/2024

TOPIC 8: EARLY ECONOMIC DEVELOPMENT & EMERGENCE OF TRADE

 Early societies depended on nature to satisfy their human wants, therefore
agriculture and domestication of animals were important.
 The main features of early economies are self-sufficiency and dependence on
agriculture, barter trade, and the emergence of money.

 Self–sufficiency and dependence on agriculture

 The economic activities of the earliest societies consisted of agricultural activities of
planting crops and domesticating animals. The earliest societies are also called
traditional societies.
 Every household‘s aim was to provide products for its own survival. This means self-
sufficiency was the aim of engaging in economic activities. Self-sufficiency agriculture
is also called subsistence agriculture.
 Before the stage of practicing agriculture, the society lived a nomadic life, which means
people did not live in a fixed place, they stayed in a place until resources for livelihood
got depleted, then they would move to another place.

 Barter trade and the emergence of money

 Barter trade is the exchange of goods and services for other goods and services e.g.
exchanging a bag of oranges for a bag of beans.
 Barter trade replaced self-sufficiency production as households did no longer need to
produce for all of their needs.
 Advantage of barter trade
 Encouraged specialisation in production,
 Resulted in the production and consumption of more kinds of products.
 Disadvantages of barter trade were that:
 It was difficult to measure the value of products
 Large products were difficult to transport
 It was difficult to find someone who want to exchange the same product one
wanted for the exact one the person had.
 There were no facilities to store surplus production

 The emergency of money: gradually money was introduced and replaced barter
trade due to its disadvantages.
Types of money used were:
 Commodity money was used e.g. crops and animals
 Metals were later used e.g. unstandardised pieces of metals such as copper
 Coins with standardised weighting and marking were produced by governments.

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 Economics / Notes Grade 10 Nkangala District/2024

 EVOLUTION OF MARKETS
 Improvements in how markets operated were mostly shown by surpluses in
production, and improvements in trade, transport, and labour specialisation, forms of
business


Surplus production: due to specialisation, increases in production were achieved.
Most producers had surplus production, meaning they produced much more than they
needed.
 Surplus production resulted in the development of markets. In these markets, people
sold and bought various products.

 Trade: formal trade was limited but better organised than before. Contracts started
to be used between buyers and sellers.
 Travelling merchants (people who specialise in selling products even though they
were not producers) came into existence. They travelled from one village to another
selling various kinds of goods.
 These traveling merchants later erected trading houses which later became shops.
 Later the merchants sold goods that came from other countries, therefore their trade
became international trade.
 Merchants insisted on payment in money and used bookkeeping methods to record
transactions.

 Transport: initially commodities were carried by pack animals and human porters
(people who carry things on their backs for others).
 Later on road transport and water transport were used. Road transport consisted of
vehicles drawn by animals, while water transport consisted of boats powered by wind
and people.

 Specialisation of labour: the improvements in markets resulted in more

specialisation in the production of various products e.g. winemaking, and planting of
various crops.
 Producers also introduced labour specialisation to increase efficiency in production.
 Labour specialisation is when each worker does a specific task in the process of
production.

MERCANTILE LAW AND DEVELOPMENT OF BUSINESS FORMATS

 Mercantile law: a set of rules and regulations followed by merchants in doing
business. Mercantile law means merchants’ law and was enforced through a system
of merchants’ courts.
 Mercantile law dealt with matters such as contracts, the use of credit, and the right to
sell and buy property
 Trade grew under mercantile law and governments were rewarded with increases in
taxes.

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 Economics / Notes Grade 10 Nkangala District/2024

 In modern times merchants’ law is called commercial law.

 Development of legal business formats: two earliest formats (forms) of business
were sole proprietor and partnership
 Sole proprietor is a one-man business and was the first form of business.
 The owner of a sole proprietor was responsible for providing all the capital. Owners of
one-man businesses had the sole right to all losses and profits.
 As the demand for goods increased, businesses needed more money to increase their
production, therefore they started to look for partners in businesses.
 Partnership is a form of business ownership where two people own a business
together. The partners share responsibilities and profits, and they also share the
liabilities of the business including the losses.

 Technological progress
 Refers to the development and usage of tools, machines, equipment, and techniques
for production.
 The following are some of the technological inventions that were linked to the
economic activities:
- machines to grind wheat
- horse cart to carry goods
- techniques of using wind (windmills) and water (watermills) energy
- development of equipment for mining and smelting of minerals
- wheelbarrows which were useful in construction, farming, and mining

GROWTH OF MONEY AND FORMS OF SAVINGS

 Growth of money: The growth in economic activities led to the growth in money
production. Governments issued coins that were in gold or silver.
 The value of the coins was equal to the value of the metal content. The coins were
legal tender which means by law they were to be accepted as means of payment.
 Paper money in the form of promissory notes was also issued. Later on, the
promissory notes were replaced by what were called banknotes. The banknotes were
backed by precious metals such as gold and silver.
 Later on problems arose with regard to the issuing of money and to solve them the
central banks were created. The function of these central banks was to issue money.

 Forms of saving: savings refers to income that is not spent. Before the establishment
of banks, money was hoarded in clay pots. Hoarding money is the act of saving money
in a secretive personal place.
 Banks were used to deposit surplus funds from households, businesses, and
governments.
 Households could also buy insurance policies which was another form of saving. With
the insurance policy, the saver would pay agreed monthly premiums.
 Savings helped economies grow as businesses could take loans from the banks to
invest in goods production.

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 Economics / Notes Grade 10 Nkangala District/2024

GOVERNMENTS AND THE REGULATION OF MARKETS (Possible essay)

 Governments in Europe changed their role from concentration on wars and politics to
economic activities.

3.1 State Involvement in Trade

 Wealthy individuals together with their governments joined efforts to increase their
trade with other countries.
 Government’s involvement in trade was in the form of levying taxes, tariffs, customs
duties, monopolies, and physical restrictions of certain goods.
 Voyage of discoveries: European governments encouraged their people to go ON
journeys around the world to find colonies.
 The colonies were used to supply natural resources to industries in their home
countries.
 Precious metals from the colonies helped to make the home countries in Europe
wealthy.
 The colonies were also used as markets for finished goods which were produced from
industries in home economies.
 Mercantilism: involves the government regulating trade in a way that the country
could obtain as much of precious metals such as gold and silver as possible.
 To increase their stock of precious metals, the governments encouraged selling goods
in precious metals,
 Exports were encouraged as they brought more precious metals to the country.
 Imports were discouraged as they took money out of the countries.

3.2 Taxation and Financing of infrastructure
 Taxation
 The main aim of governments’ involvement in the economy was to obtain money for
military purposes. Taxes offered such money, and types of taxes were used.
 Individuals paid three types of taxes which were, poll taxes, income taxes, excise
taxes, and inheritance taxes.
 Poll taxes were taxes levied on every individual adult irrespective of income.
 Income taxes were imposed on wealthy individuals and it was progressive which
means the higher the income, the higher the tax.
 Excise taxes were charged on essential products such as meat and grains.
 Merchants: paid toll taxes when transporting goods. A toll tax is a tax for using a road.
 Custom duties were charged on imported goods.
 Businesses and individuals: paid land and property taxes and sales taxes.

 Financing infrastructure
 Infrastructure referred to physical structures that supported societies such as roads,
government buildings, military facilities, and water supply.
 Infrastructure increases economic activities by facilitating production and
consumption.
 Roads enable the transportation of raw materials to factories and the distribution of
finished goods to markets.

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 Economics / Notes Grade 10 Nkangala District/2024

 Initially (before the year 1700) cities were more involved in building infrastructure than
the national governments.
 A lot of money was used to finance military activities as countries were often engaged
in wars.

 INDUSTRIAL DEVELOPMENT (Possible essay)

 The earliest industrial development became evident (around the year 1700s) when
countries started using technology in various economic activities.
 Industrial development is the growing of industries of a country to make them efficient.
 Industrial development was linked to manufacturing, technology, energy and
production of goods.

Manufacturing
 Industrial Revolution (in England) resulted in large-scale manufacturing of goods and
this spread to other countries in Europe.
 Manufacturing replaced trade and agriculture as the main focus of economic activities.
 Factories were built to engage in large-scale manufacturing of different kinds of
consumer goods.
 Labour specialisation resulted in high productivity, higher profits and more
investments.
 Increased economic growths were achieved and people‘s standard of living improved.

Technological progress
 Technological improvement played a big role in industrial development.
 Mechanisation which is the use of machine in production, was introduced and rapidly
increased production in factories (in the 1700s).
 Technological improvement resulted in improvement in roads and rail transport
networks.
 Communication infrastructure also improved and devices such as telephones, radio
and wireless communications were invented.

 Mobilisation of energy
 Steam energy was used to power machines replacing hand and animal power
machines.
 Steam energy was later used in transportation industries where vehicles were
powered by steam engines e.g. trains.
 Steam energy was later replaced by electricity as a source of energy.
 Electricity was made from coal, water, uranium or gas.
 The electrification of machines resulted in high economic growths in many countries.

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 Economics / Notes Grade 10 Nkangala District/2024

Mechanisation of production
 Factories invested in big machines which resulted in large increase in production.
 Large numbers of the same product were produced at lower cost and this is called
mass production.
 The advantage of mass production to consumers was lower prices for products.
 Farming productivity improved as fertilisers were introduce and better methods of
farming were used.

