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Types of Economic Change

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  • 0:01 What is Economic Change?
  • 0:58 Innovation
  • 1:52 Privatization vs…
  • 3:29 Globalization
  • 4:32 Lesson Summary
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Lesson Transcript
Instructor: Kevin Newton

Kevin has edited encyclopedias, taught history, and has an MA in Islamic law/finance. He has since founded his own financial advice firm, Newton Analytical.

The economies of the world are always changing - after all, not too many of us grow our own food in small villages anymore. These forces of change have wide-ranging effects, as this lesson illustrates.

What Is Economic Change?

If you're like me, then you've surely heard someone older go on about the old days. Maybe, if you were lucky, it was about how much easier things used to be. However, chances are it was about how easy we have it. In between being told about having to walk miles to school in the snow and inconceivably uphill both ways, you may have heard some complaints about how hard people used to have to work. This is especially true if they grew up in a rural area. After all, back then a lot of people had to farm for a living.

So, what changed? In short, economic change happened. Economic change exists when market forces create a change so massive that it affects just about everything. In this lesson, we are going to take a look at three types of economic change.

Innovation

Once upon a time, just about everyone was somehow involved in producing food. Currently, less than two percent of the American population is made up of farmers. So, why aren't we all starving to death? Simply put, innovation meant that it was possible for fewer people to grow more food, freeing the rest of us up for other economic activities.

Innovation occurs anytime that a new invention or technique makes processes more efficient. Farming is full of innovation - from more advanced seeds to precise watering techniques to satellite imagery of crop development. However, it is not the only economic activity in which innovation occurs. In years past, if you wanted to research something, you had to go to the library. Now, you can just pull out your phone, so even phones are subject to innovation. In my lifetime, I've experienced when brick-style cell phones were the epitome of technology, but now you can carry on a conversation on your watch.

Privatization vs. Nationalization

Not all economic change involves the things we buy. Instead, a great deal of it focuses on other forms of infrastructure that we use. Take roads, for example. The government pays for roads, streets, and interstate highways but lets us use them.

In short, the highway system is an example of a nationalized service; it is open for public use, and no one makes a profit from it. A nationalized service doesn't necessarily have to be free - in many places, public transit requires a fee. Occasionally, you'll see nationalized companies called public companies, which is really more accurate as local and state governments can own such enterprises.

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