SS7E1: The student will analyze the different economic systems Economics of Africa SS7E1: The student will analyze the different economic systems

Economic Systems All economic systems must answer 3 basic questions::- What goods and services will be produced? How will these goods and services be produced? Who uses the goods and services that are produced?

Types of Economic Systems Traditional Economy - economic decisions are made based on custom and habits, or traditions Tradition – something passed down in a culture from one generation to the next they trade or barter their goods/no money is used; problem is people need products that can’t be made or traded

Types of Economic Systems (continued…) Command Economy – the government makes most of the economic decisions for the workers government decides what will be bought and sold, and what the prices will be No individual can decide to start a business without permission from the government

Types of Economic Systems (continued…) Market Economy – economic decisions are made by individuals who decide what to produce and what to buy (the consumers and the market) also called capitalism, free enterprise, or laissez-faire (French term meaning let them do as they please) Individuals take financial risks when starting a new business

Mixed Economies All modern economies today have characteristics of all three systems but mainly are a mix of both market and command economic systems; they are called mixed economies Nearly all countries today have mixed economies because they are a combination of free enterprise and some government

Oil and other petrochemical products Area of Comparison South Africa Nigeria Type of Economy Technologically advanced market economy with some government control; one of the strongest economies in the region Poorly organized economy after a long period of military dictatorship and corruption; now trying to reorganize with more private enterprise allowed Goods Produced Mining (platinum, diamonds, gold), auto assembly, machinery, textiles, iron and steel chemicals, fertilizer Oil and petrochemicals are the primary market goods; Nigeria once exported food and other agricultural products but now must import them Leading Exports Gold, diamonds, platinum, other minerals, machinery and other equipment Oil and other petrochemical products Per capita GDP $ 9800 $ 2000 Labor Force Agriculture – 9% Industry – 26% Services – 65% Agriculture – 17% Industry – 52% Services – 30% Unemployment Rate 24% 4.9%

South Sudan Widespread poverty due to several decades of civil war with Sudan The majority are subsistence farmers; Has fertile soils and abundant water supplies Very little infrastructure (about 37 miles of paved road) Government spends large sums of money on a large army Produces 75% of the former Sudan’s total oil output (98% of country’s revenues) Working with China on a pipeline