1.7 - Kondratiev Cycles + World Systems Theory

Question 1

What is the theory behind Kondratiev cycles?

Answer 1

• Economic growth and decline occurs in cycles of 50-60 years

Question 2

What are the stages in each Kondratiev cycle?

Answer 2

• prosperity
• recession (economy returns to initial stage)
• depression (conditions declines below initial stage)
• improvement (economy returns to initial stage)

Question 3

What usually happens at the start of each Kondratiev cycle?

Answer 3

• increased public spending
• investment in new technology

Question 4

What usually happens at the end of each Kondratiev cycle?

Answer 4

• Austerity measures are introduced
• a lack of public confidence in governance

Question 5

What is World Systems Theory?

Answer 5

• idea that global trends in trade have a larger impact than states themselves in regards to economic development
• countries which make up the core and periphery changes over time in sync with Kondratiev cycles
• conflicts occur during periods of change when countries shift between core and periphery

Question 6

What was the period of Prosperity for the UK?

Answer 6

• telecom and IT boom in late 90s, early 2000s

Question 7

What was the Recession phase for the UK?

Answer 7

• Stagflation as work became inefficient and increased spending in Afghanistan and Iraq wars

Question 8

What was the Depression phase for the UK?

Answer 8

• public spending is less liberal, funding cuts to schools and healthcare
• protectionist legislation to protect domestic market from foreign competition

Question 9

What is the potential Improvement stage for the UK?

Answer 9

• increase in public spending to reduce unemployment and create new fields
  
  • eg. Green economy, biotechnology, big data
• FDI from China may help in this and move both UK and China into core