Southwest Asia The Middle East FSMS 7th Grade Social Studies; Unit 3 Production, Distribution & Consumption (Voluntary Trade/Specialization/Barriers/OPEC) October 20th – 22nd; Day 34-36 Georgia Standard SS7E6a.b.c

The Middle East Production, Distribution & Consumption Standard 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.

FIRST FIVE Agenda Message: Quiz on SWA Governments & Economies is Wednesday; 10/23/13. No After-School Tutoring this Wednesday! Standard: SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia and how specialization encourages trade between countries. Essential Question for Tuesday; 10/22/13: Why do countries trade between one another? Warm-Up: Name the four factors that influence economic growth TODAY WE WILL: Complete Economies Worksheet Start International Trade, Specialization, Trade Barriers

Answers E.Q. Answer for October 22, 2013: In international trade, “NO COUNTRY” can be completely self-sufficient producing all the goods and services it needs. Warm-Up Answer: Human Capital Capital Natural Resources Entrepreneurs

The Middle East Production, Distribution & Consumption International Trade (Trade between countries) In international trade, “NO COUNTRY” can be completely self-sufficient producing all the goods and services it needs. Specialization Specialization is a concept that means the products a country makes best and that are in demand on the world market. This is another way to build a strong economy and to earn money to buy items that cannot be made locally.

The Middle East Production, Distribution & Consumption Specialization cont. Because of this, countries specialize in producing those goods and services that they can provide most efficiently. They then look for other countries who may need those goods and services so they can sell their products to those who need them. The money earned by such sales then allows the purchase of goods and services the first country is unable to produce.

The Middle East Production, Distribution & Consumption Specialization in SWA Some countries in Southwest Asia are very rich in oil and natural gas, but they lack farmland and the ability to produce food. Saudi Arabia for example, is able to specialize in the production of oil and gas and sell these products at great profit on the world market. The money earned in this trade can be used to purchase food and technology needed to make their agriculture system more efficient.

The Middle East Production, Distribution & Consumption Specialization in SWA cont. Israel is another example of specialization. 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.

The Middle East Production, Distribution & Consumption Standard SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia (Middle East). b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos.

FIRST FIVE Agenda Message: Quiz on SWA Governments & Economies is TODAY!! No After-School Tutoring Today! Standard: SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia and how specialization encourages trade between countries. Essential Question for Wednesday; 10/23/13: What are Trade Barriers? Warm-Up: Which factor that influences economic growth deal with the knowledge and skills of workers? TODAY WE WILL: Start International Trade, Specialization, Trade Barriers

Answers E.Q. Answer for Wednesday October 23rd: Trade Barriers are anything that slows down or stops trade between countries. Warm-Up: Human Capital

The Middle East Production, Distribution & Consumption 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.

The Middle East Production, Distribution & Consumption Trade Barriers cont. The countries in Southwest Asia, as in most parts of the world, have experienced trade barriers at one time or another. Tariffs A tariff is a tax placed on goods when they are brought into one country (imported) from another country.

The Middle East Production, Distribution & Consumption Tariffs cont. The purpose of a tariff is usually to make the imported item more expensive than a similar item made locally. This sort of tariff is called a “protective tariff” because it protects local manufacturers from competition coming from cheaper goods made in other countries.

The Middle East Production, Distribution & Consumption Tariffs cont. Most countries have tariffs on goods imported from other countries. Quotas 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 limit) on a particular product that can be imported or acquired in a given period.

The Middle East Production, Distribution & Consumption Quotas cont. For example, Israel could decide that only 1500 cars could be brought into the country from Japan in a given year. That would make it more likely that people buying cars would have to buy Israeli-made cars if Japanese cars were not available.

The Middle East Production, Distribution & Consumption Embargos 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). Embargos usually come about when two countries are having political disputes.

The Middle East Production, Distribution & Consumption Embargos cont. A good example of an embargo is the decision by the OPEC countries to stop all sales of oil and gas to the countries supporting Israel in the 1973 Arab-Israeli war.

The Middle East Production, Distribution & Consumption Standard SS7E6 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia (Middle East). c. Explain the primary function of the Organization of Petroleum Exporting Countries (OPEC).

The Middle East Production, Distribution & Consumption Organization of Petroleum Exporting Countries (OPEC) The Organization of Petroleum Exporting Countries (OPEC) was created in 1960 by some of the countries with large oil supplies who wanted to work together to try to regulate the supply and price of the oil they exported to other countries. The first five countries to join OPEC were Kuwait, Iraq, Saudi Arabia, Iran, and Venezuela.

The Middle East Production, Distribution & Consumption OPEC cont. These countries, along with others who have joined since 1960, continue to decide; a. how much oil they will produce, and that determines b. the price of oil on the world market. When they produce less oil, the price on the world market goes up. When they increase production, the price on the world market goes down.