Economies differ from one country to another. However, in every economy, there are producers, who are the owners and workers who make products, and consumers who buy and use products.
The owner of the workplace usually decides how and what things will be made. But who are the owners? In some countries, the workplace belongs to private citizens. This economic system is called capitalism. In others, the government owns most workplaces. This is called communism.
Capitalism is also called a free-market economy. Producers compete freely for consumers business. People may save money in banks, and invest money in a business.
Under communism, the government controls the prices of goods and services, what things are made, and how much workers are paid. Today, only a few nations practice communism.
In some countries, the government owns some industries while others belong to private owners. This system is sometimes called a mixed economy.
Three hundred years ago, most people did work by hand. Then people invented machines to make goods. They used energy instead of people and animals to run machines. This was a new form of technology.
Technology is a way of putting knowledge to practical use. This change in the way people made goods was called the Industrial Revolution.
The Industrial Revolution divided the world into developed nations and developing nations. People live differently in the two types of nations. Developed nations have more industries and a high level of technology. Developing nations have fewer industries and simpler technology.
Only about one fifth of the worlds people live in developed nations. These nations include the United States, Canada, Japan, and most of Europe. In these countries most people live in towns and cities. They work in offices and factories. Most people have enough food and water. Most people can get an education and healthcare. Developed nations have some problems. Two of these problems are unemployment and pollution.
Most of the people in the world live in developing nations. These nations are mainly in Africa, Asia, and Latin America. Most people grow just enough food for themselves. People and animals do most of the work. There are many problems in these nations. They include disease, food shortages, and political unrest.
Different countries have different economic strengths. Countries trade with one another to get the things they want and need.
Countries have grown to depend on one another. Developing nations tend to sell foods, natural resources, and simple industrial products. In return, they buy high-technology goods from developed countries.