Transcript File

Economy and the Middle
East
SS7E6 The student will explain how voluntary trade benefits buyers and
sellers in Southwest Asia (Middle East). a. Explain how specialization
encourages trade between countries. b. Compare and contrast different types
of trade barriers, such as tariffs, quotas, and embargos. d. Explain why
international trade requires a system for exchanging currencies between
nations.
SS7E7 The student will describe factors that influence economic growth
and examine their presence or absence in Israel, Saudi Arabia, and Iran.
a. Explain the relationship between investment in human capital (education and
training) and gross domestic product (GDP).
b. Explain the relationship between investment in capital (factories, machinery,
and technology) and gross domestic product (GDP).
Specialization
• Specialization allows
countries to produce
the goods and
services they do best
• This helps them to
earn money to buy
items they cannot
make or grow locally
Specialization of Labor:
Different people doing jobs that
they become specialized in.
Example
Saudi Arabia: rich in oil and natural gas. They produce oil and trade
it on the world market for items such as like food since much of
their country is desert and food is not produced efficiently.
Trade Barriers
• Trade barriers
are anything
that slows
down or
prevents one
country from
exchanging
goods with
another.
Tariffs
• Tariff is a tax placed
on goods when they
are brought in from
another country
• The purpose is to
make the foreign
goods more
expensive so people
will buy local items.
Embargo
• An embargo is when
one country will no
longer trade with
another country in order
to punish it and cause
problems with that
country’s economy.
• Sometimes referred to
as sanctions
• Usually they occur over
political disputes.
Example- 1973 OPEC stopped selling oil to
the nations who supported Israel
Quota
• A quota is setting a
limit to the amount of
foreign goods that
can come into a
country
• Example: In Israel
only 1,500 cars from
Japan can be brought
into that country in a
given year.
Exchange Rate/ Currency
• Most countries have their
own currencies (money)
• In order to trade with each
other a system of changing
from one currency to another
needs to be established. This
system is known as the
exchange rate.
• For countries to trade they
need to know what goods
cost in each country.
Gross Domestic Product (GDP)
• GDP is the value of all goods and services
produced by a country in a single year.
• Wealthy countries have a much higher per
capita GDP (amount of goods and services
produced divided by the population) than
developing or underdeveloped countries.
Human Capital
• Human Capitol-—Workers of
a business or country
including their education,
training, skills, and health.
• More skills and more
education mean more
productive workers
• Companies that invest in
training and education for
employees typically have
higher profits
Capital Goods
• Factories, machines, and technology are
needed to make goods and important to
economic growth.
• Advanced technology and organization
helps increase production and makes
production more efficient.