Transcript Power point for SS7E6 and SS7E7

Southwest Asia
(Middle East)
Lesson 8:
Economic Understandings in the
Middle East
Activate!
• You have 60 Seconds to…….
Draw the “Economics Web”
STANDARD(S):
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. B. Compare and contrast different types of trade
barriers, such as tariffs, quotas, and embargos.
C. C. Explain the primary function of the Organization
of Petroleum Exporting Countries (OPEC)
D. D. Explain why international trade requires a system
for exchanging currencies between nations.
STANDARD(S):
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 and GDP.
b. Explain the relationship between investment in
capital and GDP.
c. Explain the role of oil in these countries’
economies
d. Describe the role of entrepreneurship
Translation
• You need to know…
– Israel, Saudi Arabia, and Iran
(How they invest in their economy/their role in
OPEC)
Essential Question
• How do “economic factors” influence the
Middle East?
Specialization
• NO country produces everything it needs.
• Specialization encourages trade between
countries
• Both parties benefit!
Example:
• Middle East – Oil
• U.S. – food, medicine, raw materials
IT’S ALL GOOD! Right?
TRADE BARRIERS
• Too much of a good thing can be BAD! You
have to protect DOMESTIC PRODUCERS!
a. Tariffs (tax on imports): higher price on imports
= lower demand on imports = higher demand on
domestic goods
b. Quotas (limit on imports): “supply shortage” =
higher price on imports = higher demand on
domestic goods
c. Embargoes – NO trade at all!
Examples:
• Embargoes:
– U.S. & Iran – terrorism
– U.N. & Iraq – invasion of Kuwait
– U.N. & Afghanistan – 9/11 (weapons)
– Saudi Arabia & Israel – cancelled to join WTO
• Tariffs:
– Saudi Arabia & Egypt – food shortages resulted in
lifting tariffs
Think about it…..
• Agree/Disagree & Explain: There should be a
O.C.W.O – Organization of Countries Without
Oil – to control the BUYING of oil. If all
countries without oil would ban together and
stop buying (boycott) oil, the prices would
DROP! This would work! Right?
“You down with OPEC?”
• 1960 – Organization of Petroleum Exporting
Countries (Iran, Iraq, Saudi Arabia, Kuwait,
Venezuela)
• Purpose: Control oil prices
• Result: POWER
“You gotta have money….honey!”
• Currency: type of money a country uses
– Many countries, many types
• Foreign Exchange – process of converting your
money to buy goods in a foreign country
• NECESSARY TO DO BUSINESS!!!!
Examples:
1 Turkish lira = $0.80
1 Afghan afghani = $0.02
Field of Dreams:
“If you build it, they will come!”
• Who is they? Buyers and sellers!
• Build what? A good economy!
• How? Management of “Productive Resources”
---How can these benefit a country’s economy?
1. Human Capital
2. Capital
3. Natural Resources
4. Entrepreneurship
Good, bad, or ugly?
• GDP – Gross Domestic Product
• Provides a “Health Assessment” & used for
comparison
• Studies have shown….investment in human
capital and capital results correlates to higher
GDP
• If you fail to plan, you plan to fail!
• Israel, Saudi Arabia, Iran – Do they have a
plan?
Israel
•
•
•
•
•
•
Growing steady (5% a year)
Invested in HC
Highly educated work force
97% literacy rate – highest in ME!
Capital – Foreign investments – technology
Modern infrastructure, continuously
improving
• Very healthy economy – even without OIL!
Saudi Arabia
• GDP is growing, but….
• Anchored by oil, & won’t last forever=
PROBLEM
• Flaws: High unemployment, large # of foreign
workers fill open jobs
• Investing in HC – sends students to college
abroad, revamping its education system
• Investing in Capital – bad roads, multi-billion
dollar rail system, factories
Iran
• Oil – 85% of government revenues!
• Investing slowly in Capital: telecommunications,
roads, and machinery
• They got 99 problems, but OIL ain’t one! (aka:
lots of flaws)
– Unemployment
– Weak educational system (students are moving to
other countries for an education)
– Educated Iranians leave
– Stifling government control
– Poor facilities for oil
* They’re trying to fix their problems.
Entrepreneurs
• Vital to economic growth! Why?
– New ideas = newer, better products
• Israel – positive environment
(entrepreneurship is encouraged)
• Saudi Arabia – making reforms
• Iran – small, many obstacles
Summarize!
Pick one:
Agree/Disagree & Explain:
1. If all OIL supplies suddenly disappeared, the
economies of the countries of the Middle
East would collapse.