Modern World Economic Issues Unit 20 Modern World Economic Issues

Stop and Think! Partner A: Identify one business that is moving from using people to machines. Partner B: Identify another.

Modern World Economic Issues Unit 20 – Modern World Economic Issues Modern World Economic Issues Types of economic systems North vs. South issues Rise of the Pacific economic community International trading agreements Essential Questions

I. Types of Economic Systems Who owns the businesses? Who makes the economic decisions Examples Market (capitalism - Adam Smith) Private Citizens The market Great Britain Command (Socialism Communism) The government (“the society”) Government officials Cuba (USSR) Mixed Small businesses are owned by private citizens and the large businesses are owned by the government Generally the public with some government influence USSR under Lenin China under Mao Zedong

Stop and Think! Partner A: Explain a market economy Partner B: Explain a command economy Partner A: Explain a mixed economy

Which heading best completes the partial outline below? _____________________ A. Market System B. Profit incentive C. Entrepreneurs Forms of government Characteristics of capitalism Structure of the Guild System Elements of Culture

In a command economy, economic decisions are mostly influenced by Consumer demands Government policies Private investors Banking practices

“A group of planners makes all economic decisions “A group of planners makes all economic decisions. The group assigns natural, human, and capital resources to the production of those goods and services it wants. The group decides how to produce them and to whom to distribute them.” This description best applies to the Manorial economy of feudal Europe Mercantile economy of the 1700s in Europe Command economy of the Soviet Union Market economy of the United States

Which statement best describes how a command economy functioned in the Soviet Union?  1. The laws of supply and demand controlled the economy.  2. Trade policies mandated that imports exceed exports.  3. The success of the agricultural sector controlled the price of manufactured goods.  4. A central authority determined the type and quantity of goods to be produced.

Which statement describes one major aspect of a command economy? Supply and demand determines what will be produced Most economic decisions are made by the government The means of production are controlled by labor unions The economy is mainly agricultural

What has the end of communism in the Soviet Union caused many countries in Eastern Europe to do? Shift to a command economy Maintain a communist form of government Pursue free-market economic policies Join the Warsaw Pact

II. International Trading Agreements NAFTA = North American Free Trade Agreement An economic plan to ease trade between Canada, Mexico, and the US

The major reason the Mexican Government strongly supported the North American Free Trade Agreement (NAFTA) was that this agreement would 1. raise tariffs on United States products entering Mexico 2. reduce Mexico’s economic dependence on Europe 3. promote investment and economic growth in Mexico 4. stimulate trade between Asia and Latin America

International Trading Agreements OPEC = Organization of Petroleum Exporting Countries An economic alliance of oil producing nations They determine how much oil will be produced  which determines what the price of oil will be on the open market

The Organization of Petroleum Exporting Countries (OPEC) is best known for its efforts to (1) develop workable alternatives to fossil fuels (2) bring Western oil technology to the Middle East (3) stop the export of oil to non-Arab nations (4) establish production quotas to control the price of oil

Since the creation of the Organization of Petroleum Exporting Countries (OPEC), member nations have joined together to 1. determine the supply of oil on the world market 2. establish a policy of independence in trade 3. maintain a low price of oil per barrel 4. isolate themselves from the rest of the world

Which group of countries earns much of their revenue from the sale of oil? (1) China, Korea, Jordan (2) Turkey, Brazil, Lebanon (3) Argentina, Malaysia, Chile (4) Saudi Arabia, Nigeria, Venezuela

International Trading Agreements The European Union (EU) Many European nations joined together in an economic association  to make trading easier between the nations Their monetary unit is now called the “Euro”

In recent years, a major success of the European Union (EU) has been the 1. creation of a single military force 2. rejection of national sovereignty 3. adoption of a single language 4. elimination of trade barriers

Stop and Think! Partner B: Explain NAFTA Partner A: Explain OPEC Partner B: Explain the European Union

* Organization of American States * European Union * North American Free Trade Agreement (NAFTA) These organizations and agreements are examples of Political isolation Military alliances Regional cooperation Collective security

III. North vs. South Issues NORTH – highly industrialized – high literacy rate – high standard of living SOUTH – industry not yet developed – poor education systems – much poverty

Stop and Think! Partner A: Explain how the northern hemisphere seems to differ from the southern.

“developing” nations: nations that are trying to become more modern they are often refereed to as being “Third World” nations (The “West” = 1st World - the old Communist nations = 2nd world)

Characteristics of a developing nation: Lack of modern technology Too much dependency on a single cash crop Too much international debt (taxes can’t help the people → they have to pay back loans)

Characteristics of a developing nation: Lack of industry Few skilled workers Poor access to raw materials Little investment money (capital) Political instability

Stop and Think! Partner B: What is a developing nation? Partner A: Identify the characteristics of a developing nation.

International Assistance Organizations: These provide economic assistance to “developing” areas when needed The World Bank UNICEF (United Nations Children’s Fund) The World Health organization (the “WHO”) The International Monetary Fund (the “IMF”) These provide economic assistance to “developing” areas when needed

Stop and Think! Partner A: Explain 2 International Assistance Organizations Partner B: Explain the other 2

IV. Rise of the Pacific Economic Community Re-emergence of Japan AFTER WWII: U.S. Occupation/Aid Following WWII  the U.S. “occupied” Japan and provided economic aid to rebuild Japanese businesses The U.S. provided a market for cheap industrial products from Japan

The Japanese Industrial Style At first  they copied what worked in other industrial nations Then  they developed their own methods teamwork robotics

Why Japan had such great industrial success Their Educational System: helped train workers for industry There is little military: government can focus spending on industry Their government helped the businesses: Tariffs: taxes on products coming into Japan from other nations Embargoes: certain products are restricted from being allowed into the country

Their “Balance of Trade” After awhile  Japan developed a favorable “balance of trade” with the U. S. (they made more money off the U.S. than we made off them)

Stop and Think! Partner A: How did Japan rebuild after WWII? Partner B: Why did they have such great success? Partner A: What is a balance of trade?

Which statement concerning modern Japan is most accurate? 1. Japan has modernized while maintaining some elements of its traditional culture 2. Japan has become a leader in global peacekeeping efforts 3. Japan has taken an active role in international military events 4. Japan has severed all traditional ties in favor of western values

A study of Japan’s economy since World War II would lead to the conclusion that: 1. government support of technological advances can improve a nation’s economic position 2. imperialism is necessary for the economic development of a nation 3. a communist system leads to economic prosperity 4. the feudal system is more economically productive than the market system

In recent years, which factor has been a major reason for the economic tensions between the United States and Japan? 1. Japan’s trade deficit with the United States was very high 2. the United States refused to place quotas on Japanese goods 3. the United States imported more from Japan than it exported to Japan 4. Japan lowered tariffs on goods imported from the United States

Rise of “Asian Tigers” Rapidly developing nations in Asia are known as the “Asian Tigers” They include: Taiwan, Hong Kong, Singapore, and South Korea

The Future? China: as they convert from Communism to Capitalism South East Asian nations: Vietnam – Indonesia - Malaysia