Transcript Economic+Understandings+SS7E5

Economic Understandings
SS7E5 The student will
analyze different economic
systems.
Saudi Arabia
 Saudi Arabia is one of the largest countries in
Southwest Asia, and it is located to the south of
Israel on the Arabian Peninsula. Though much
of Saudi Arabia is desert, the country has rich oil
reserves that allow Saudis to buy most of the
goods they cannot produce themselves. The
king of Saudi Arabia and his advisors make most
of the decisions about how and where to use oil
profits, but they have invested a lot of the
nation’s wealth in technologies that allow them
to produce goods they would not be able to do
otherwise in a desert climate.
Turkey
 Turkey is located in the northwestern part of the Middle
East. The city of Istanbul in Turkey is seen as the
gateway to Asia from Europe, and for thousands of years,
traders have crossed Turkey traveling from Europe to
Asia. Turkey has the least economic freedom of the
three countries. Industries such as airlines and railroads
have been controlled by the government. The
government has controlled the telephone and television
industries, as well. However, in recent times, the
government has been loosening its hold on these key
businesses. More private ownership has been allowed.
More laws have been passed to protect business owners.
Israel
 Israel is located along the Mediterranean coast
and has a relatively small geographic area and
almost no natural resources. Israel was founded
in 1948 as a homeland for the world’s Jews, and
most of the citizens are Jewish. Though they
have had many problems with their Arab
neighbors, Israel has good relations with much
of Western Europe and with the United States.
The Israelis have built an economy based on
advanced technology that has allowed them to
make up for much of what they lack in farmland
and natural resources.
Each economic system answers the following questions:
1. What to produce?
2. How to produce?
3. For whom to produce?
Traditional
Based on culture and tradition.
Strong social network.
Based on primitive methods and tools.
Strongly connected to subsistence
farming.
Market
an economic system based on individual
choices and voluntary trade.
Governments play a minor to no role
Consumers and their buying drive the
economy. (supply and demand)
Market determines prices and wages
Also known as:
• Free enterprise
• Capitalism
Command
All major decisions are made by the
government or central authority.
an economic system in which the government
decides what goods will be produced, how they
will be produced, and how they will be
distributed.
Government holds the power
No choice
No incentives to work hard
Saudi Arabia
1. What to produce? Oil, petrochemicals,
mining, refining
2. How to produce? Over 95% of oil
industry is operated by government.
Relies on specialized labor from other
countries. Trying to increase private
ownership of businesses.
3. For whom to produce? 1/3 of GDP is
based on exports to other countries.
1.
2.
Riyadh
Monarchy
3. GDP per capita $11,400
Turkey
1. What to produce? Diversified economy
with service, manufacturing , and
agriculture.
2. How to produce? Moved from a
government directed economy to more
private enterprise.
3. For whom to produce? 1/5 of production
is exported.
Ankara
Republican Parliamentary Democracy
GDP per capita
$7, 300
45.8%
29.5%
24.7%
Israel
1. What to produce? Large portion comes
from high tech manufacturing, financial
services and agriculture.
2. How to produce? Israel has government
ownership of business, but is gradually
privatizing companies.
3. For whom to produce? Goods and
services for domestic and international
markets
GDP per capita
$ 19, 500
Jerusalem
Parliamentary
Democracy
Command, Market, Traditional?
Command
Market
Israel
SAUDI
ARABIA
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Turkey