Economic history

Economic history is the discipline of economics analyzing the history of economics in the previous era. The subject helps to decipher economic strategies in the past using various historical or statistical methods and economic models. Economic history comprises of financial and business history, revealing the economic policies prepared by our ancestors. In earlier days, economic policies were made with a primary objective to maintain economic balance in the state. Here, you will learn various aspects of economic history, including demographic and labor history. Once you learn the economic history, you can use the knowledge of the subject to understand earlier methods. 

What Is Economic History?

Economic history is a study of economics helping marketers to decipher the history of economic policies pleading to our knowledge of economic processes. Most of the modern economic theories are supported by robust facts and theories obtained from observations based on practical applications. The subject deals with the economic prospects of early civilization, including the utilization of land resources, labor, capital, etc. It analyzes the performance of economies in the past, evaluating their strength and weaknesses and developments made with time. 

Also, it can be concluded that in the ancient era, civilization was concerned with conveying the minimum neutral flavor to sustain. It elucidates regarding their lifestyle, popular jobs at that time, their earnings and expenditure, and other daily activities. These variables hold a strong significance in the study of economic history as they explain better than the basic definition. To understand the history of economics, it is crucial to understand the concepts of economics, including other segments of the market. Thus, economic knowledge with a glimpse of history plays an essential role in drafting an effective economic policy for a secure future. 

What Is the Importance of Economic History for Development? 

5 Key Significances of Economic History 

• Introduction of efficient products: Having a good knowledge of economic history contributes to the production of a better quality of goods and services. Also, it allows marketers to trade these products at cheaper rates contributing to the growth of an organization. Introduction of efficient products has resulted in a boost in the production of both consumer and industrial products. Thus, for an organization to boost its sales, it is imperative to determine an average rate of the product. 

• Enhancement of infrastructural facilities: Infrastructures are considered to be an essential factor contributing to the development of an organization. It includes the enhancement of facilities like communication, transportation, warehousing, fuel, and power, etc. Thus, infrastructure facilities play a significant role in the development of a business and help to enhance the growth of an economy. 

• Proportionate economic development: It is essential for an organization to maintain a healthy balance between their social and economic factors. These factors include agriculture and industry goods, consumer and capital goods, large scale and small scale industry, labor-intensive, etc. 

• Improvised social services: Social services like proper medical attention, maintaining law and order, compulsory and free education to the minorities, etc. contribute to economic development. So, improvising these services act as a catalyst for promoting the growth of an economy. 

• Efficient productivity: With a boost in economic activity, the production in an economy also grabs the pace required to sustain in the competitive environment. It leads to increased productivity and efficiency, utilizing all the productive resources and boosting the production volume. 

Economic History: Why Did Markets Develop? 

The liberal market system is comprised of willful economic trades occurring in various aspects of the continuously evolving market. Since the introduction of the trading system, free markets gained popularity in society as a fundamental technique of social coordination. In the early days, people were less aware of the methods regarding the trade of assets. Also, the then government was clueless regarding the utilization of money as a means of exchange. The subject of economic history is among the constant and unplanned progress rather than a series of inventions. 

In the ancient era, trade was possible only based on the barter system, which involved the exchange of goods. This was due to the lack of other media of exchange, which compelled the people to follow the barter system. Sooner or later, people realized that a definite medium of exchange would allow the fluency of these beneficial transactions. But, there was a significant challenge standing in their way known as the "double coincidence of wants" by the economists. Cattle was known as the oldest medium of exchange back in 9000 - 6000 B.C. Thus, in 1000 B.C., China became the first economy to introduce metallic coins and setting an example of money trade. 

Moreover, there are shreds of evidence indicating the development of banking systems in early Mesopotamian civilization. Eventually, as merchants developed more idea of expanding their business and analyzed the trading system, new notions of activity developed in the market. Broadly, there are two concrete towers of the market economy, including voluntary exchange and private property. For the development of the markets sustaining in an economy, it is essential for these two factors to work along in the market. Thus, a very renowned philosopher, John Locke proposed an idea favoring the private system of ownership as the means of production. After extracting all the insights given in the past, we have managed to develop our markets and secure a better future. 

Economic History: Have Austerity Measures Ever Worked? 

Austerity is a technique adopted by any nation to compensate for their financial losses. It can either be by increasing taxes or equalizing the revenue generated to that of the annual expenditure. Countries like Estonia, Latvia, and Lithuania are known for their effective austerity policies. Initially, these were former communist countries with vast and appealing government infrastructures earning significant cuts. 

For instance, the cuts made by any of these nations led to a significant decline in GDP, approximately 25% annually. On the contrary, it managed to recover rapidly, boosting its GDP by 7% and improving all the losses in somewhere around 5 years. This helped them to set an example of a responsible player in society and gain the attention of several developed nations. Now, numerous nations are joining these countries in the line of development regardless of their size and wealth. 

When talking about democracies, austerity does not work practically as the government sanding in the line of power loses the election. In Europe alone, austerity has drastically failed to recover for any country, leaving them in debt of the developed nations. It has also failed to lower interest rates and help the developing nations to clear their debt. Austerity was first developed in Ireland with 7% interest rates pushing the economy towards the darkness of debt and loans. Greek is at a deficit of 24%, which is more closer to a credit card. 

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Economic History 

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