Economic systems of europe


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Economic systems of europe

  1. 1. Economic Systems of Europe 3/2/2009
  2. 2. Basic Questions: <ul><li>What to produce, how to produce, for whom to produce? </li></ul><ul><li>All nations of Europe must answer these questions </li></ul><ul><li>The economic choices that governments make affects its people and how strong its economy will be </li></ul>
  3. 3. 4 factors of economic growth: <ul><li>(only write what they are, you have the definitions) </li></ul><ul><li>Human capital: the value of people to an economy </li></ul><ul><ul><li>Investing in health, education, and training of workers helps economy </li></ul></ul><ul><ul><ul><li>Better education and training = coming up with new technology </li></ul></ul></ul><ul><ul><ul><li>Leads to better use of resources </li></ul></ul></ul>
  4. 4. 4 factors of economic growth: <ul><li>Capital goods: products that have value </li></ul><ul><ul><li>Factories, machinery, new technology </li></ul></ul><ul><li>Entrepreneurs: people who start new businesses to sell a new technique, idea, or product </li></ul><ul><li>Natural resources: land, air, water, and minerals </li></ul>
  5. 5. Economic Growth takes time <ul><li>It takes time for changes of an economy to take effect </li></ul><ul><ul><li>Countries that were communist (command) economies and switched to democratic countries with mixed economies: improvement is slow </li></ul></ul><ul><ul><ul><li>Ex: Romania: good resources, good human capital (educated people), bad economy…it had been communist, so there was an unwise use of capital goods… </li></ul></ul></ul>
  6. 6. Specific countries… <ul><li>Your instructions: listen as I quietly talk through the slide, then you may work at your table to make sure you fill in all the information you need on your graphic organizer… </li></ul>
  7. 7. United Kingdom <ul><li>Role of government: </li></ul><ul><ul><li>Mixed economy: mostly market (people start businesses). Government controls some industries (welfare, medicine, oversees banking and money) </li></ul></ul><ul><li>Economic history: </li></ul><ul><ul><li>When economy struggled in past, government controlled economy more </li></ul></ul><ul><ul><ul><li>After World War II, war had destroyed the country </li></ul></ul></ul><ul><ul><ul><li>Government took control of coal, oil, electricity, and shipbuilding </li></ul></ul></ul>
  8. 8. <ul><li>Factors of economic growth: </li></ul><ul><ul><li>Human capital: skilled workers and competent managers </li></ul></ul><ul><ul><li>Capital goods: less efficient industries shut down, high-tech industries started to create jobs </li></ul></ul><ul><ul><li>Entrepreneurs: many successful entrepreneurs </li></ul></ul><ul><ul><li>Natural resources: makes wise use of what they have, including oil in the North sea </li></ul></ul><ul><li>How are they doing? </li></ul><ul><ul><li>Large population, high standard of living, low unemployment and inflation </li></ul></ul>
  9. 9. Russia <ul><li>Role of government: </li></ul><ul><ul><li>Mixed, trying to move towards a market economy </li></ul></ul><ul><li>Economic history: </li></ul><ul><ul><li>Communist for 70 years (part of the Soviet Union) </li></ul></ul><ul><ul><li>Government planned and owned everything in the economy (command) </li></ul></ul><ul><ul><ul><li>Unwise use of resources and factories </li></ul></ul></ul><ul><ul><li>Trying to make big change since end of U.S.S.R: taking a long time to improve </li></ul></ul>
  10. 10. <ul><li>Factors of growth: </li></ul><ul><ul><li>Human capital: skilled and educated workers (one thing the Soviet Union did well) </li></ul></ul><ul><ul><li>Capital goods: </li></ul></ul><ul><ul><ul><li>returning businesses to private control (individual people own): many people resisted, thought government should own </li></ul></ul></ul><ul><ul><ul><li>improving factories and technology </li></ul></ul></ul><ul><ul><li>Natural resources: has a lot of oil </li></ul></ul><ul><li>How are they doing? </li></ul><ul><ul><li>GDP has been growing a lot in recent years, showing they are doing better overall </li></ul></ul>
  11. 11. Germany <ul><li>Role of government: mixed economy </li></ul><ul><li>Economic history: </li></ul><ul><ul><li>Before reunification: </li></ul></ul><ul><ul><ul><li>West Germany: mixed economy, efficient farms, strong industry </li></ul></ul></ul><ul><ul><ul><li>East Germany: command (communist) economy, collectivized (government-owned) farms, weak industry </li></ul></ul></ul><ul><ul><li>Since reunification: west part of Germany has had to finance (pay for) improving east Germany </li></ul></ul><ul><ul><ul><li>Changing economy of east Germany to be like the west has been difficult </li></ul></ul></ul>
  12. 12. <ul><li>Factors of economic growth: </li></ul><ul><ul><li>Human capital: </li></ul></ul><ul><ul><ul><li>strong, competitive education system. </li></ul></ul></ul><ul><ul><ul><li>Train students for skilled professions from early age. </li></ul></ul></ul><ul><ul><li>Capital goods: </li></ul></ul><ul><ul><ul><li>Large and successful industry (western part of the country) </li></ul></ul></ul><ul><li>How are they doing? </li></ul><ul><ul><li>Some struggles because of reunification </li></ul></ul>
  13. 13. Discuss… <ul><li>How are the economies of the United Kingdom, Russia, and Germany similar? </li></ul><ul><li>How can a country’s history affect its economy? </li></ul><ul><ul><li>Consider instability vs. stability, past economic systems </li></ul></ul>