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Middle East Unit Three Government & Economics

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1 Middle East Unit Three Government & Economics

2 Part One – Intro into Governments
A nation’s type of government refers to how that state’s executive, legislative, and judicial organs are organized. All nations need some sort of government to avoid anarchy. Democratic governments are those that permit the nation’s citizens to manage their government either directly or through elected representatives. This is opposed to authoritarian governments that limit or prohibit the direct participation of its citizens.

3 COMMUNISM a theory advocating elimination of private property.
 a system in which goods are owned in common and are available to all as needed. Typically a one party system in which all political power rest with the party (i.e. China).

4 Theocracy A form of government in which God or a deity is recognized as the supreme civil ruler. Often religious institutional representatives (i.e.: a church), replaces or is mixed into the civilian government. Can be an Oligarchy, Representative Democracy, and even a Monarchy.

5 Saudi Arabia is a monarchy and is an example of a unitary government
Unitary government system – the central government holds nearly all of the power. Local governments such as state or county systems may have some power at certain times, but they are basically under the control of the central government. Central government has the power to change the way state or county governments operate or abolish them altogether. Some unitary governments have elected officials who, once elected, may make and enforce laws without taking the opinions of those at lower levels of government into consideration. In a monarchy (area ruled by a king or emperor), the ruler and his advisors make most of the decisions – this is an example of a unitary government Saudi Arabia is a monarchy and is an example of a unitary government Blue Countries are Unitary

6 Federal government system – a political system in which power is shared among different levels of government. The states have some powers that the federal government does not have such as the right to collect property taxes and determine sales taxes. The national government (or central government) also has some powers that the state does not, such as the right to declare war and make treaties with foreign countries In the Middle East, Israel is an example of a Federal government

7 Confederation Government
A confederation government system is one in which the local governments hold all of the power and the central government depends on the local governments for its existence The central government has only as much power as the local governments are willing to give The United Nations is a good example of a confederation The United Nations can only offer advice and assistance when the member nations agree to cooperate This organization is a regional group organized to help the member countries cooperate on economic matters, encourage cultural exchanges, and to help keep peace and stability in the region In the Middle East, the Organization of Petroleum Exporting Countries (OPEC) is an example of a Confederation government

8 Autocratic Government
An autocratic government is one in which the ruler has absolute power to do whatever he wishes and make and enforce whatever laws he chooses Individuals who live under autocratic governments do not have any rights to choose leaders or vote on which laws are made and put into practice Some autocratic governments may allow the people rights in certain areas like managing local affairs, but the central governments keeps control of all the most important aspects of the country’s life People usually have little or no power to use against the government if they disagree with decisions that government or ruler has made A monarchy such as Saudi Arabia, where the king has ultimate power, is one example

9 An oligarchy means “government by the few.”
In this form of government, a political party or other small group takes over a government and makes all of the major decisions. The people of the country have little choice but to go along with the decisions they make This sort of government can be very similar to an autocratic government. Iran could be described as an oligarchy, because a small group of religious and political leaders makes many of the important decisions

10 In a democratic government system, the people play a much greater role in decided who the rulers are and what decisions are made Democracy comes from the Greek word “demos,” which means “people.” In this form of government, a great deal of power is left in the hands of the people People who live in a democracy generally recognize that there must be some rules to organize society, but the goal is to leave as much individual freedom as possible. Decisions are often made by a majority of votes, but there are also laws in place to protect individual rights. In the Middle East, Israel is a good example of a democracy Those organizing the new government of Iraq are hoping to establish a democratic system

11 In a parliamentary form of democratic
In a parliamentary form of democratic government, the people vote for those who represent the political party they feel best represents their views of how the government should operate. The legislature they elect, parliament, makes and carries out (enforces) the laws for the country. The leader of a parliamentary form of government is usually chosen by the party that winds the majority of representatives in the legislature. This leader is often called a prime minister or premier and is recognized as the head of the government. The prime minister leads the executive branch of the government and must answer directly to the legislature for the actions and policies recommended. In many parliamentary governments, a head of state (president or king/queen) serves as ceremonial leader

12 The actual work of the parliament is led by the prime minister, who represents the leading political party in the country. He or she rules with the help of a cabinet, or group of advisors. A prime minister may be votes out of office if the party he or she leads lose power In the Middle East, Israel has a parliamentary government Its citizens elect representative to the national parliament called the Knesset. The political party that gets the most votes in the Knesset gets to choose the Prime Minister

13 Presidential Government
A presidential form of democratic government has a president, or chief executive, that is chosen separately from the legislature The legislature passes the laws, and it is the duty of the president to see that the laws are enforced The president holed power separately from the legislature, but he does not have the power to dismiss the legislature or force them to make particular laws The president is the official head of the government The legislature does not have the power to dismiss the president, except in extreme cases when the president has broken a law The president is BOTH the lead of state and the head of the government

14 Governments and Resources
Part 2 – Middle East Governments and Resources Iran In 1979, the Islamic, or Iranian, revolution overthrew the monarchy that had ruled Iran for centuries. Today, Iran is a theocratic republic. This means that the government is based on religious principles (Islam) and the wishes of its people. The head of state is the Supreme Leader, who is always an ayatollah, or recognized religious authority.

15 The Supreme Leader is chosen by the Assembly
The Supreme Leader is chosen by the Assembly of Experts and holds the position for life. The assembly consists of 86 religious scholars. The people elect the assembly and the president by popular vote. The president governs based on the religious guidance of the ayatollah. The supreme leader has final say over many of the president’s decisions. The president can serve two terms of four years each. Iran’s legislature is called the Consultative assembly. Citizens 16 and older can vote for the 290 members of the Assembly.

16 Israel Israel has a representative parliamentary democracy.
The head of state is the president, who actually does not have much power. The Israeli prime minister is the head of the government. The legislature elects the president. The president then chooses the head of the largest political party to be the prime minister. The prime minister must organize a coalition to govern. A coalition is a group of several different political parties that have to cooperate in order to make decisions.

17 This type of government is known as a coalition government.
The Israeli legislature is called the Knesset. The Knesset holds most of the power in the Israeli government. Israelis eighteen and older elect these officials by popular vote. While most of Israel’s Jewish citizens see themselves as secular, meaning they do not feel the country’s laws should be based solely on religious beliefs, many Israeli laws are influenced by the Orthodox Jews, those who want government policy to be made according to religious law These people represent about 25 percent of the Israeli population. Elections are held in Israel every four years

18 Saudi Arabia Saudi Arabia's government is one of the few absolute monarchies in the world today. The government is a monarchy governed by Islamic Shari’a Law.(law based on the Quran) In 2004, however, the Saudi government began allowing men who are 21 and older to vote for half of their local officials. Men can also vote for one-third of the members of the legislature. The king has a cabinet called the Council of Ministers. The Council mostly consists of members of the royal family. The Saudi legislature is called the Consultative Council. The king chooses two-thirds of the members of the Council.

19 Saudi Arabia is ruled by a hereditary monarchy, which means the government is led by a king who comes from a family that has ruled the country for several generations. The King of Saudi Arabia has been a member of the al-Saud family since the 1920’s. The king and his advisors, many of whom are his family members or influential business and religions leaders in the country, make the laws There is no written constitution, and the king rules for life The people of Saudi Arabia do not choose the king When a king dies, the Saudi family announces who the next king will be from among their male family members Conservative religious leaders also have a great deal of influence in decisions made by the monarchy

20 Religion and Southwest Asian Governments
In the United States and many western nations, religion and politics tend to be separate. In much of the Middle East, however, religion and politics are often mixed. Countries like Iran based their systems of gov’t on religion. Religion is important even in countries that don’t base their governments on religion. Many political parties in the Middle East are religious Many parties represent different branches of Islam. Since the majority of the people in the region are Muslim, religion also influences the way people vote Israel is a democratic state, but it was founded as a Jewish homeland.

21 Part 3 - Basic Economic Systems
Every society must deal with providing goods and services for its people Each society must also develop an economic system that can decide how to use the limited resources of that society as well. Three basic questions must be answered: 1) What goods and services will be produced? 2) How will goods and services be produced? 3) Who uses the goods and services that are produced?

22 In a traditional economy, most of the economic decisions are made based on custom and on the habit of how such decisions were made in the past. Goods and services are exchanged instead of using cash as a payment in a traditional economy This is known as bartering As areas become more urbanized, however, bartering gives way to cash as payment. In the Middle East, traditional economies can still be found in rural areas of many countries in this region No country today can be described as having a traditional economy

23 A command economy is one in which government planning groups make most of the economic decisions for the workers This group decides which goods and services should be produced, as well as prices for the goods and wages paid to the workers No individual could decide to start a new business The government decides what and where to produce the goods. The government decides what jobs the workers do and where the goods produced would be sold

24 The third basic type of economic system is a market economy.
In a market economy, economic decisions are made by individuals who decide what to produce and what to buy Other names for a market economy are capitalism, free enterprise, or laissez-faire (French phrase that means to allow them to do as they please) Individuals who want to begin their own business may do so - they take economic risk as they invest in their new business If new businesses are successful, the people who organized and funded it will be successful and make a profit If the business fails, the investors will lose money

25 Today, no countries in the world have economic systems that are purely traditional, purely command, or purely market systems India is a good example of a mixed economy in Asia The government makes some decisions about agriculture and industry, but free enterprise and entrepreneurship are very common. Nearly all countries today have mixed economies – they have characteristics of a free market and free enterprise as well as some government planning and control

26 Specialization Not every country can produce all of the goods and services it needs Because of this, countries specialize in producing those goods and services they can provide best and most efficiently They look for others who may need these goods and services so they can sell their products The money earned by such sales then allows the purchase of goods and services the first country is unable to produce In international trade, no country can be completely self-sufficient (produce all the goods and services it needs) Specialization creates a way to build a profitable economy and to earn money to buy items that cannot be made locally

27 Some countries in Southwest Asia are very rich in oil and natural gas, but they lack farmland and the ability to produce enough food Saudi Arabia is able to specialize in the production of oil and natural gas and sell these products at great profit on the world market The money earned in this trade can then be used to purchase food and the technology needed to make their agriculture system more efficient Israel has little in the way of oil wealth, but they have become leaders in agricultural technology even though they have a limited supply of land suitable for farming They can sell this technology to earn the money to supplement their limited production of food Israeli Desert cabbage

28 Trade Barriers Trade barriers are anything that slows down or prevents one country from exchanging goods with another Some trade barriers are put in place to protect local industries from lower priced goods made in other countries Other times trade barriers are created due to political problems between countries Trade is stopped until the political issues are settled A tariff is a tax placed on goods when they are brought into (imported) from one country to another country The purpose of a tariff is usually to make the imported item more expensive than a similar item made locally This sort of a tariff is called a protective tariff because it protects local manufacturers from competition coming from cheaper goods made in other countries

29 A quota is a different way of limiting the amount of foreign goods that can come into a country
A quota sets a specific amount or number of a particular product that can be imported or acquired in a given period of time A third type of trade barrier is called an embargo An embargo is 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 economy Embargoes usually come about when two countries are having political disputes Embargos often cause problems for all countries involved The US currently has embargos against Cuba, Iran, & North Korea An example is when OPEC launched an oil embargo in 1973 against nations that supported Israel in the Yom Kippur War

30 Currency & Exchange Rate
Most of the countries in Asia have their own type of currency (money). In order for them to pay for goods as they trade with each other, they have to establish a system of changing from one type of currency to another This system is known as an exchange rate They also have to be able to exchange their currencies with those used by other countries around the world

31 Human Capital Human capital means the knowledge and skills that make it possible for workers to earn a living producing goods or services The more skills and education workers have, the better they are able to work without mistakes and to learn new jobs as technology changes Companies that invest in better training and education for their workers generally earn more profits Good companies also try to make sure working conditions are safe and efficient, so their workers can do their jobs without risk Companies that have invested in human capital through training and education are most likely to have profitable businesses and more satisfied workers than companies that do not make these investments Countries where training and education are easily available often have higher production levels of goods and services, therefore higher gross domestic product, than countries that do not offer these opportunities

32 Israel has wide access to education and an economy that depends on technology industries to make up for the country’s lack of natural resources Many Israelis work in industries related to medical technology, agricultural technology, mining, and electronics They also have highly developed service industries (businesses that supply the needs of the rest of the working population) Israeli GDP is very high because they have invested heavily in their human capital Saudi Arabia’s main industry is as an exporter of oil (petroleum) The technology involved in the oil industry is complicated and requires well-trained and educated labor force Saudi Arabia also has enormous building projects which require investment in human capital By contrast, some Saudi citizens still practice traditional economic activities such as farming and herding animals Because oil is such an important part of the world’s economy, the Saudi GDP is high

33 Capital Goods Capital goods (the factories, machines, and technology that people use to make products to sell) are important to economic growth. Advanced technology and the organization of this technology into factories where many workers can work together increases production and makes the production more efficient Producing more goods for sale in a quicker and more efficient way leads to economic growth and greater profit This greater profit leads to a higher GDP Middle Eastern countries have invested heavily in Capital Goods in such areas as oil production, communications, and the defense industry.

34 Natural Resources Distribution of natural resources throughout Asia plays a major part in determining the type of work people do and how comfortable they are able to live A natural resource is something that is found in the environment that people need Water, trees, rich soil, minerals, and oil are all examples of natural resources One of the most valuable resources in this part of the world is rich farmland

35 Literacy Literacy, or the ability to read and write, has a big effect on the standard of living of a country Those who cannot read or write have a very difficult time finding decent jobs Lack of education also prevents many young people from becoming the engineers, doctors, scientist, or entrepreneurs that modern economies need in order to bring improvements to their countries In many parts of the world, education is only available to those who can afford to pay for it themselves In those countries, the literacy rate is often quite low Countries that have stronger economies usually make money available so that anyone who wants an education can go to school

36 Gross Domestic Product
One way to measure the standard of living is the Gross Domestic Product, or GDP The GDP is the value of all goods and services produced within a country in a given year and converted into US dollars for comparison When divided into a value per capita (or per person), it can be used as a measure of the living conditions in a country The higher the GDP value, the better the living conditions in the country

37 Part 4 - Middle East Economics
There are many different types of economic systems in the Middle East. Many countries have mixed economies with different levels of government control. Some countries are less developed than others in the region. Middle Eastern countries have thrived on producing exports to other countries. Cash crops have included grain, silk, and cotton. For the last sixty years, the region’s main export has been oil. The region imports much of its food and other essential products.

38 Oil Oil is one of the most important and valuable natural resources in the Middle East Oil and Natural gas are called fossil fuels, which mean they were created when plants and animals that lived centuries ago decayed underground Oil and natural gas are also considered non-renewable natural resources, meaning they cannot be replaced once they are taken out of the ground Most of the world's industrial nations depend on a steady supply of oil and natural gas The US has to import nearly half of all the oil it uses, almost 18 million barrels every day Many countries of the Middle East have become very rich over the past 50 years as the world demand for oil and gas has increased Over half of the world’s known oil reserves come from the Middle East

39 Israel Israel has a mixed economy that is also technologically advanced. The Israeli government and private Israeli companies own and control the economy. Israel does not have many natural resources. Israel has to import grain, oil, military technologies, and many other goods. The country is a producer of high-tech equipment, electronics, biomedical industries, and cut diamonds. The service industry accounts for much of Israel’s economy – areas such as insurance, banking, retail, and tourism account for over half of it. Israel relies heavily on US economic and military aid.

40 Saudi Arabia Saudi Arabia also has a mixed economy but leans toward government control.. Saudi Arabia’s main export is oil. The oil industry has made the Saudi royal family quite wealthy. In fact, several members of the royal family are among the wealthiest people in the world. Oil accounts for well over half if the country’s economy. Oil funds the country’s education, defense, transportation, health, and housing. The government is trying to encourage more private businesses to boost the economy and decrease the countries dependence on oil.

41 Iran Iran has great oil wealth, like Saudi Arabia, through there is also a more mixed economy that has grown in spite of government attempts to keep tighter control Iran’s command economy has not been very efficient in recent years Even though there is oil wealth, many Iranians do not share in the money as much of it goes toward the military

42 Turkey The government of Turkey controls the country’s economy.
Turkey’s economy, however, is not entirely a command economy. A large part of the country’s economy is based on farming. The Turkish government has had many disputes with other countries over its use of natural resources, such as the Euphrates River. Clothing and textiles are the countries major industries. The service industry makes up about half of Turkey’s economy, as it does Israel's economy.

43 Economic Growth Israel
Economic growth has been difficult to achieve for many Middle Eastern countries. War is a major threat to the region’s economies. For example, both war and a large number of immigrants present challenges to the Israeli economy. The Israeli government has taken control of certain economic activities in order to address these problems. The Israeli government controls most activities related to agriculture. This helps the nation’s economy because the county’s natural resources are so limited.

44 Saudi Arabia Some gulf countries invest money to make their economies more diverse. In the last few decades, Saudi Arabia has begun encouraging the development of industries other than oil in order to make its economy stronger. In 1976, the Saudi government crated the Saudi Basic Industries Corporation. The SBIC invests in capital goods. These capital goods have made the country a steady producer of steel, industrial gasses, plastics, and petrochemicals.

45 Iran Wars can also influence a country’s economy by influencing what the country decides to produce. Iran’s war with Iraq led Iran to put more money into its military industries. The number of people without jobs is Iran is high. The country provides less protection for its human capital than other countries do. For example, Iran does not have private labor unions to protect workers. It is a mixed economy on the side of government control of oil and major industries.

46 The 1973 Oil Crisis Some trade barriers are political.
Sometimes governments limit trade with other countries because they disagree with the actions or policies of those countries. This is a trade barrier designed to purposefully hurt the economy of another country. The 1973 oil crisis is one example of such a trade barrier. The 1973 oil crises began on October 17, 1973. OPEC announced that its member nations would no longer ship oil to countries that had aided Israel in its recent war with Egypt. Those countries included the US and many in Europe. OPEC raised the price of oil 70%. As a result, the price of gasoline in the US quadrupled over several months.

47 These actions had a large impact on industrialized nations because of their growing dependence on oil and gas. Western countries had been used to cheap and plentiful oil resources before the crisis. Oil consumption had doubled in the US. At the time, the US was using about 1/3rd of the world’s energy. The crisis caused the value of the US dollar to drop. It also had a widespread negative impact on the world economy. OPEC started shipping oil to Western nations again in 1974. Western economies began to get stronger again.

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