SS7E5. C. Compare and contrast the economic systems in Israel, Saudi Arabia, Turkey, and Iran
Has almost no natural resources or farmlandDeveloped good relations with much of Western Europe and the United StatesEconomy based on advanced technology
Rich oil reserves Profit from oil allows them to buy most goods they are unable to produce themselves King and his advisors make most decisions about how and where to spend the oil profits Invested much wealth in technology and services which allows them to produce goods not usually found in a desert climate
Great oil wealthCommand economy has not been efficient in recent timesShift to a more mixed economyDespite the oil wealth, the Iranian people do not share in the money
Least economic freedom of these four countriesIn earlier times, the gov’t has controlled airlines, railroads, telephone, and televisionRecently the gov’t has loosened its hold on these industries Have allowed some private ownership More laws have been passed to protect business owners
1. The economies of Israel, Saudi Arabia, Turkey, and Iran could best be described as….market, command, mixed, or traditional?2. How have the Israelis made up for their lack of natural resources?3. Which industry does the gov’t of Saudi Arabia heavily control?4. How has the king of Saudi Arabia used the profits from oil to help other areas of his kingdom?
SS7E6.a. Explain how specialization encourages trade b/w countries
Not every country can produce the goods and services it needsSo they “specialize” in producing a good or service that they can produce most efficientlyThey can then trade that product for goods and services they needWay to build a profitable economy and earn money to buy what it needsSaudi Arabia specializes in the production of oil and gas.Israel specializes in agricultural technology even though they have a limited supply of farm land.
1. What is “economic specialization”?2. Saudi Arabia specializes in the production of?3. Israel specializes in?
B. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos
Anything that slows down or prevents one country from exchanging goods with anotherSome protect local industries from lower priced goods made in other countries (keeps competition away)Some created due to political problems between countries
Tax placed on goods when they are imported into one country from anotherPurpose is to make the imported good more expensive than the similar item created locally “protective tariff”-protects local manufacturers from competition
Different way of limiting the amount of foreign goods than can come into a countrySets a specific amount of particular goods that can be imported in a certain time frame
When one country announces that it will no longer trade with another country in order to isolate the country and cause problems with that country’s economyUsually result of a political dispute1973-OPEC decided to stop all sales of oil and gas to countries supporting Israel in the 1973 Arab-Israeli war
1. What is a tariff?2. What is a quota?3. What is an embargo?
c. Explain the primary function of theOrganization of Petroleum ExportingCountries (OPEC)
Created in 1960 by countries with large oil suppliesCountries wanted to work together to regulate the supply and price of oil exported to other countriesFirst five countries: Kuwait, Iraq, Saudi Arabia, Iran and VenezuelaContinue to decide how much oil they will produce and that determines the price on the world marketBasic principles of supply and demand
1. Why was OPEC created?2. What happens to the price of oil when OPEC countries decide to limit the production?3. Where are most of the OPEC countries located?
A. Explain the relationship b/w investment in human capital and gross domestic product
The knowledge and skills that make it possible for workers to earn a living producing goods and services.Companies that invest in human capital generally earn higher profits.Countries that invest in human capital generally have higher production levels of goods and services. This can lead to a higher gross domestic product than countries that do not invest in human capital
Determined by taking the total value of all goods and services produced by a country in a single year.Wealthy countries generally have a much higher GDP than developing or underdeveloped countries.Countries in SW Asia have widely different GDP levelsCountries that make it possible for workers to have education and training generally have higher GDPs.
Much access to educationEconomy depends on technology industries to make up for country’s lack of natural resourcesMany citizens work in industries related to medical technology, agricultural tech., mining and electronicsHighly developed service industriesGDP very high b/c of its investment in human capital
Main industry is as an exporter of oil and petroleum products.Technology involved in oil industry requires education and much training.Also have modern communications and transportation systemsEnormous building projectsThese economic factors require investment in human capitalSaudi Arabia has a high GDPSome citizens still practice traditional economic activities like farming and herding
World’s fifth largest producer of oilOil industry requires well-trained and educated workersHave well respected schools and universitiesHowever, in recent years, Iranian government has not done a good job of regulating the parts of the economy that are under gov’t control.
Why have the Israelis made a big investment in human capital?Why would the Saudi oil industry need a large investment in human capital?One of Iran’s biggest problems with their state-run oil industry is::If a country does not invest in its human capital, how can it affect the country’s GDP?
B. Explain the relationship betweeninvestment in capital and GDP
Factories, machines, and technology that people use to make other goods Can increase production, which can increase profit which can increase GDP Israel Invested heavily in capital goods Also invested heavily in technology used in defense industry Saudi Arabia Invested heavily in capital goods Especially in technology needed in oil, transportation, and communication Iran Has made great investments in capital goods related to oil production, technology and communication Also spends a great amount on technology for its defense industry
What are capital goods?Israel has invested heavily in capital goods in all of the following areas EXCEPT…..
C. Explain the role of oil in these countries’ economies.
One of most important and valuable resources in the Middle EastMost of the worlds’ industrial nations depend on a steady supply of oil and gasU.S. imports nearly half of all the oil it uses, almost 18 million barrels every dayOver half of the world’s known supplies of oil come from countries in the Middle East
Israel Has practically no oil at all Economy depends more on technology than natural resources Saudi Arabia Has very few natural resources other than oil Very influential in world economy and OPEC The gov’t has modernized roads, schools, airports, and communication systems Iran Most valuable resource is oil 85% of country’s money comes from the sale of oil and petrochemicals 1/3 of population works in agricultural areas Political problems have led to economic difficulties Member of OPEC, therefore benefits by keeping the price of oil high in the world market
Why are oil and gas such valuable natural resources?How much of the oil used by the U.S. has to be imported every day?How has the Saudi gov’t used its national wealth to change the country?How do Iran and Saudi Arabia benefit from belonging to OPEC?How has Israel’s lack of oil affected that country’s economy?
Creative, original thinkers who are willing to take risks to create new businesses and products.Willing to risk their own money (usually) to produce new goods and services in the hope that they will earn a profit.Only about 50% of all new businesses are still operating after three yearsImportant asset to a strong economy