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Economic System (US, China, South Korea, India)

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Characteristics of Capitalist, Communistic, Market and Mixed economy

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Economic System (US, China, South Korea, India)

  1. 1. ECONOMIC SYSTEM (US, China, South Korea, India)
  2. 2. US ECONOMY (Capitalism)
  3. 3. Capitalism • An economic and political system in which a country's trade and industry are controlled by private owners for profit.
  4. 4. Basics of Capitalism: • Capitalism is said to promote economic growth and the overall standard of living. • In other words, capitalism creates CAPITAL (money) …and lots of it.
  5. 5. Basics of Capitalism: • Buyers (people) influence the market through their demand and ability to purchase goods and services. There is very little government intervention. • Producers (businesses) are motivated by profit (money) and therefore create whatever goods people will buy. • In other words, the businesses run the economy, the government stays out of it!
  6. 6. Unlimited Needs and Wants Limited Resources   Scarcity  Choices  WHAT to produce HOW to produce FOR WHOM to produce  
  7. 7.  WHAT to produce HOW to produce FOR WHOM to produce   Choices • United States: the 3 economic decisions are determined by individuals (…for the most part)
  8. 8. Free Enterprise • System in which business can be conducted freely with little government intervention.
  9. 9. In the US, we have the right to… • 1. own private property and enter into contracts • 2. make individual choices • 3. engage in economic competition • 4. make decisions based on self-interest • 5. participate in the economy with limited government involvement and regulation
  10. 10. Freedom to own private property and enter into contracts Private property: • Goods owned by individuals and businesses, NOT the government You can use it as you wish You can buy as much as you can afford
  11. 11. Freedom to own private property and enter into contracts Contracts: • Agreements people make with one another to buy and sell goods and services *Legally binding even if not written!
  12. 12. Freedom of choice • Free to do what you want with what you own • Producers have freedom to produce what they want for who they want • Consumers have freedom to purchase what they want from who they want
  13. 13. Freedom to engage in competition Competition • Economic rivalry between businesses selling the same or similar product *keeps prices “fair” and encourages producers to improve on products
  14. 14. Freedom to make decisions based on self-interest • Producers and consumers make choices for their own benefit • Voluntary exchange: both parties benefit from an exchange
  15. 15. Freedom to participate in the economy with limited government involvement • Individuals and businesses make most of the decisions, NOT the government • Government: regulator • Laws to protect workers, consumers, and businesses • Government also provides public services (taxes) • Redistributes wealth (Ex: welfare) • Ultimate goal: economic growth
  16. 16. Economic actors in a free enterprise? 1. Producers 2. Consumers 3. Government
  17. 17. Both products and resources are being exchanged This free exchange of goods and services is called…. The MARKET
  18. 18. Kinds of Markets… 1. Product market • All the exchanges of products (goods and services) 2. Resource market • All the exchanges of resources
  19. 19. Capitalism - The Features • Private Property • Price Mechanism • Freedom Of Enterprise • Competition • Profit Motive • Sovereignty of the Consumer • Labour – As a Commodity
  20. 20. Capitalism - Pros • The Rich Variety Of Goods And Services • Proper Use Of Resources • Inducement To Work • Efficient Production • Increase In Standard Of Living • Automatic • Growth Of Entrepreneurship • Economic Freedom
  21. 21. Capitalism - Cons • Unequal Distribution Of Wealth • Class Struggle • Exploitation Of Labour • Wasteful Competition • Business Fluctuations & Unemployment • Disregard Of Public Welfare • Lack Of Coordination
  22. 22. CHINA (Communalism)
  23. 23. What is Communism? • Communism - a government where people shared work fairly and were paid equally. • The word “Communism” comes from the Latin word “Communis” which means common or belonging to all.
  24. 24. The Beliefs of Communism • The rich get richer. • The poor get poorer. • People wanted to make everything equal.
  25. 25. The Goal of Communism • Goal: to get rid of social classes and make everything fair for everyone.
  26. 26. Problems with Communism: • Lack of individuality • Lack of choice • Equal treatment for all, even if you work harder than all the rest
  27. 27. Chinese Economy from WWII - Present • After WWII, the Communist Party gained a lot of support. • Mao Zedong was the leader
  28. 28. Mao’s China • Mao Zedong used propaganda to spread the ideas of Communism and published “The Little Red Book” to teach people communist philosophies
  29. 29. The Great Leap Forward - 1958 • In 1958 Zedong began a radical program called the Great Leap Forward to increase production in farms and factories • The Communists rushed to increase production and made people with little to no experience try to farm or produce steel in their backyards. • The steel was of poor quality making it useless and the poor weather resulted in a widespread famine. • An estimated 30 million people died of starvation
  30. 30. The Cultural Revolution - 1966 • Create a society with no ties to the past: • Closed schools • Urged students to rebel against their students, these people were called “Red Guards” • Many Ancient Chinese buildings were destroyed • Anyone opposing Zedong was attacked by the young Red Guards • Finally, they began to turn against Zedong and were eventually imprisoned • Hundreds of thousands of people were killed • China was in turmoil!
  31. 31. The Four Modernizations - 1981 • Deng Xiaoping became the new leader of China in 1981. Over the past 20 years, China has seen slow changes in their economy, allowing some free enterprise (meaning that the government does control ALL aspects of the economy) • Xiaoping led The Four Modernizations: • Farming • Industry • Science • Defense
  32. 32. Modern China • Today, China is a major economic power • China still only has one political party, the Chinese Communist Party, meaning there is no political freedom • In 1989, people gathered in Tiananmen Square in China’s capital to protest for democracy. The government sent in troops and tanks, 1000’s were killed or wounded.
  33. 33. Modern China • There is still a need for human rights reforms… • China today is one of the world’s greatest manufacturing countries • While the economy is slowly changing, there is not much room for political change given the fact that there is only one political party allowed.
  34. 34. SOUTH KOREA (Market Economy)
  35. 35. Introduction • South Korea is the 12th largest economy in the world with a GDP (PPP) of 1.459 trillion in 2010. • South Korea is one of the fastest growing economies from the 1960s to 1990s, and was termed as one of the Asian Tigers, along with Hong Kong, Singapore and Taiwan
  36. 36. Introduction • South Korea's economic growth relied heavily on its exports, due to a lack of natural resources, and small domestic consumer market. • This also makes them the 7th largest exporter and 10th largest importer in the world. • The South Korean economy has also grown from one which is labor-intensive, to one which is more capital and technology- orientated.
  37. 37. Introduction • South Korea's growing economy is also one of the few countries which avoided recession during the 2008 financial crisis. • South Korea is also a member of world organizations including the G-20, APEC, OECD and WTO. • It has also signed free trade agreements with other countries, with the most important free trade agreement signed with the US in 2007, the Korea-US Free Trade Agreement (KORUS FTA) which removed all trade and investment barriers between 2 countries. • This also made US their second largest export market.
  38. 38. Economic Geography • South Korea has a land area of 96,920 square km, with 16.58 percent of arable land. • The country's main agricultural crops are rice and barley. Other products supplied by South Korea includes vegetables, fruits, root crops, cattle, pigs, chicken, milk, eggs and fish. • South Korea also enjoys few natural resources such as coal, tungsten, graphite, molybdenum, lead and hydropower potential.
  39. 39. Population and Labour Force • South Korea has a population of 48.75 million people as of 2010, with a labour force of 24.62 million people. In 2010, the unemployment rate in South Korea is 3.725 percent. • South Korea has a labor force with 70 percent of its workers employed as irregulars, people who take up temporary or uncommon jobs. An imbalance of work protection and benefits between the regular and irregular workers have led to strikes and protests by the irregular workers.
  40. 40. Industry Sector • The industry of South Korea contributes 39.4 percent of the country's GDP in 2010. • The industry and manufacturing industries are the major growth engine for South Korea during its economic progress in the 1980s. • South Korea's largest industries are electronics, automobiles, telecommunication and shipbuilding.
  41. 41. Industry Sector • Electronics boosted the South Korean economy in the 1980s, by becoming the world's sixth largest manufacturer of electronic goods such as color televisions, microwave ovens, radio, watches and personal computers. . • South Korea is also a major manufacturer of semiconductors, with Samsung Electronics and Hynix Semiconductor the global leaders in the production of memory chips.
  42. 42. Industry Sector • The automotive industry also plays a major role in the South Korean economy today. It has grown into one of world's largest automobile producers, coming in 5th after the United States and Germany, with an estimate of 4.27 million automobile produced a year. • Some of South Korea's international automobile brands include Hyundai, Kia and Renault.
  43. 43. Industry Sector • South Korea is a global player in the production of ships, with a 50.6 percent share of the global shipbuilding market in 2008. • Four of the world's largest shipbuilding companies are from South Korea: Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding. • Europe's largest shipbuilder, STX Europe, is also owned by South Korea.
  44. 44. Industry Sector • Services in South Korea contributes 57.6 percent of the nation's total GDP, and employs 68.4 percent of the workforce. • The government shifts its focus from manufacturing to services in 2009, and experts predict that the services will be the driving force of South Korea's economy for the next few years, as current productivity level is just at 58 percent of that in manufacturing.
  45. 45. INDIA (Mixed Economy)
  46. 46. Introduction The indian economy , the third largest economy in the world in terms of PURCHASING POWER, is going to touch new height in coming years. According to global investment bank by 2035 india would be 3RD largest . Economy of the work just after US and CHINA. It will grow to 60% of size of the US. Economy
  47. 47. HISTorY :- The Histroy of india economy can be broadly divided into three Phase:  Pre-Colonial  Colonial  Post Colonial Pre- Colonial :- The economy histroy of india since INDUS VALLEY civilization to 1700 AD can be categorised under this phase. During this Phase indian economy was very will developed. It has very good trade relation with other parts of world. Before the advent of the East India Company each village
  48. 48. Continue….. in india was a relt sufficient entity and was economically independent as all the economies needs were fulfilled with in the village.. Colonial:- The arival of East India Company in india caused a huge strain to the indian economy and there was a two way depletion of resources- The british would buy raw materials from india at cheaper rates and finished foods were sold higher than normal price in indian market. During this phase indias share of world income declived from 22.3% to 38% in 1952
  49. 49. POST COLONIAL INDIAN ECONOMY:- After india got independence from colonial rule in 1947, the process of rebuliding started various policies and schemes were formulated. 1st 5 years plan came in to implemention in 1952. there 5th year plan started by indian government, focused on the needs of the indian economy.  Indias Economy is bound for slower growth. In recent months, indian government has introduced Pro business economic reforms and outlined plans to increase. Spending on capital investment and large scale social programs. In the first three months of 2013 the GDP growth slowed to 4.8% and it is likely to go down further due to weak Consuption , Capital, investment & decline government spending.
  50. 50. SECTORSOF THE INDIAN ECONOMY Primary Sector Secondary Sector Tertiary Sector Other Sectors •Organized Sector •Unorganized Sector: •Public Sector •Private Sector
  51. 51. Primary Sector The economic activity depends mainly on exploitation of natural resources . Agriculture and agriculture related activities, forestry and fishing, mining, and extraction of oil and gas.
  52. 52. Secondary Sector  Involves manufacturing  The industrial production of physical goods .
  53. 53. Tertiary Sector  Involves providing intangible goods like services , attention, advice, experience, and discussion.  Financial services, management consultancy, telephony and IT are good examples of service sector.
  54. 54. What is External Trade ? Exchange of capital, goods, and services across international borders or territories. In most countries it represents significant share of gross domestic product (GDP).
  55. 55. EXTERNAL TRADE AND INVESTMENT
  56. 56. Importance Of External Trade •International trade is exchange of capital, goods, and services across international borders or territories. In most countries, it represents a significant share of gross domestic product (GDP)
  57. 57. International trade is the backbone of our modern, commercial world, as producers in various nations try to profit from an expanded market, rather than be limited to selling within their own borders.
  58. 58. India Trade: Imports India’s major imports comprise of crude oil machinery, military products, fertilizers, chemicals, gems, antiques and artworks. Imported goods are divided into the following categories: Freely importable items: For these items, no import license is required. They can be freely imported by an individual or a firm. Canalized items: These items can only be imported by public sector firms. For example petroleum products fall under this category. Prohibited items: Items such as unprocessed ivory, animal rennet and tallow fat cannot be exported to India.
  59. 59. India Trade: Exports Indian exports comprise mainly of engineering and textile products, precious stones, petroleum products, jewelry, sugar, steel chemicals, zinc and leather products. Most of the exported goods are exempt from export duties. India also exports services to several countries, primarily to the US. In fact, India is among the world’s largest exporters of services related to information and communication technology (ICT). It is also the key destination for business process outsourcing (BPO).
  60. 60. Risks in international trade Buyer insolvency; Non-acceptance; Credit risk; Regulatory risk; Intervention; Political risk; and War and other uncontrollable events. In addition, international trade also faces the risk of unfavorable exchange rate movements
  61. 61. Income and consumption What is national income ? National income measures the total value of goods and services produced within the economy over a period of time National Income can be denoted in different ways with different meaning attached to it.
  62. 62. Gross Domestic Product (GDP) Gross National product (GNP) Net National Product (NNP) The GDP of India has grown from a merge 93.7 billion rupees in 1950 to about 410006.4 billion rupees in 2006. India's per capita income (nominal) is $ 1219, ranked 142nd in the world, while its per capita purchasing power parity (PPP) of US $3,608 is ranked 129th
  63. 63. Strengths of INDIANECONOMY  India is well placed to benefit from globalization and outsourcing Demographics of India are favorable. There is much scope for increases in efficiency.
  64. 64. Problems faced in Indian Economy Inflation. Poor educational standard. Poor Infrastructure. Balance of payment deterioration High level of debt Large budget deficit Rigid labour laws

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