Types of Economies
- Agrarian
Economy:
- Definition:
An economy where the primary sector (agriculture, mining, etc.)
contributes 50% or more to the total Gross Domestic Product (GDP).
- Dependency:
A significant portion of the population relies on the primary sector for
their livelihood.
- Example:
India at the time of independence was an agrarian economy. While India's
primary sector contribution to GDP has decreased to around 18%, a large
portion of the population (approximately 60%) still depends on it for
livelihood. This makes India a unique case, described as an agrarian
economy in terms of dependency despite not being so in monetary terms.
- Industrial
Economy:
- Definition:
An economy where the secondary sector (manufacturing, industry)
contributes 50% or more to the total GDP.
- Characteristics:
A higher contribution from the secondary sector indicates a higher level
of industrialization.
- Historical
Context: Western economies that industrialized early are examples of
industrial economies and are now considered developed economies. Many
developed economies have moved beyond this phase as industrialization
matured.
- Service
Economy:
- Definition:
An economy where the tertiary sector (services) contributes 50% or more
to the total GDP.
- Characteristics:
The service sector employs the largest number of people in these
economies.
- Historical
Context: Early industrialized economies were among the first to
transition into service economies. In India, the service sector has been
a major growth driver, contributing 65% to the overall economic growth
between 2003-04 and 2012-13.
Stages of Economic Growth and Population Shift
Historically, economies have transitioned through stages of
growth marked by population shifts between sectors:
- Agrarian
to Industrial Shift: Industrial activities became recognized as a
faster way to generate income compared to agriculture. Countries globally
pursued industrialization.
- Industrial
to Service Shift: As industrialization intensifies, populations tend
to move from the primary sector to the secondary sector. Further economic
development leads to a shift from the secondary sector to the tertiary
(service) sector.
- Post-Industrial
or Service Societies: Economies where the tertiary sector contributes
over 50% of the GDP and employs over half of the population are known as
post-industrial or service societies. Euro-American countries largely fall
into this category.
India's Aberration: India is highlighted as a country
that, along with others industrializing post-World War II, shows deviations
from the typical population and income shift patterns observed in early
industrialized nations.