ECONOMICS IN SOUTH AND EAST ASIA SS7E8The student will analyze different economic systems. SS7E9 The student will explain how voluntary trade benefits buyers and sellers in South and East Asia SS7E10 The student will describe the factors that cause economic growth and examine their presence or absence in India, China and Japan ECONOMICS IN SOUTH AND EAST ASIA

ELEMENTS Compare how traditional, command, and market economies answer the economic questions of (1) what to produce, (2) how to produce, and (3) for whom to produce. Explain how most countries have a mixed economy located on a continuum between pure market and pure command. Compare and contrast the economic systems in China, India and Japan Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers, such as tariffs, quotas, and embargos Explain why international trade requires a system for exchanging currencies between nations. Explain the relationship between investment in human capital (education and training) and gross domestic product (GDP). Explain the relationship between investment in capital (factories, machinery, and technology) and gross domestic product (GDP). Describe the role of natural resources in a country’s economy Describe the role of entrepreneurship

ESSENTIAL QUESTIONS How do the traditional, command, and market economies of South and East Asian countries answer the economic questions of (1) what to produce, (2) how to produce, and (3) for whom to produce? Where are the economic systems of South and East Asia located on a continuum between pure market and pure command? What are the similarities and differences between the economic systems in India, China and Japan? How does specialization encourage trade between countries in South and East Asia? How are tariffs, quotas, and embargos barriers to trade in South and East Asia? Why does international trade require a system for exchanging currencies between nations? What is the relationship between investment in human capital (education and training) and gross domestic product (GDP)? What is the relationship between investment in capital (factories, machinery, and technology) and gross domestic product (GDP)? How do natural resources affect a countries economy? What is the role of entrepreneurship in South and East Asia?

What is an Economic System? Every society, whether a country, state, city, town, has an economic system An economic system is how a society organizes the production, consumption and distribution of goods and services

Systems of Economy There are three main types of economic systems Traditional Found mostly in societies that are based on farming People produce enough goods to survive Either by farming, gathering or hunting Make their own clothes and tools Anything extra is usually traded Command Government controls what is produced, how things are produced Government has all the resources and dictates what is to be made and who gets the product Decisions made on wealth, class status or by position in a waiting line Market Based on what the consumers of the country want to buy and sell Supply and demand determines what is produced and how it is produced People may own their own businesses Who gets a product determines how much they can afford to buy it

Countries with Different Systems NORTH KOREA PAKISTAN UNITED STATES OF AMERICA

The Idea of Mixed Economy Most countries in the world have a mixed economy Most are in between command and market economies Because of growing populations, citizens acquiring more rights, the addition of resources and government changes, countries have moved towards mixed economies Examples of countries with mixed economies United States England France South Africa

Economic System of India India has a mixed market economy today after previously having a command system. India. India has a rare mixture of market, command and traditional principles. Many citizens still use agriculture as their means of living, but India has a high level of technology, including communication services, electronics, outsourcing of its workers, and a booming movie industry. Even with these changes, India is still one of the poorest countries in Asia.

Economic System of China China has a mixed market economy that adds ideals of socialism, which still allows some government control. China has introduced many reforms, or societal changes, over the years which has increased their economy. The Chinese still use agriculture to make their economy grow, but they do allow some citizens to have small businesses. China also makes money from industries such as iron, steel and manufacturing. The growth of China can also be contributed to many people moving and seeking work in it’s large cities like Shanghai and Hong Kong.

Economic System of Japan Japan has a mixed market economy and has one of the strongest overall economies in the world. Japan’s number one moneymaker is manufacturing, specifically cars, electronics, and ships. Japan imports their raw materials to make their products due to little land and resources. The government controls things like banking and trading and they set tariffs on international imports.

Economic System of North Korea North Korea has a command economy due to its Communist government. The government has control of resources and what is produced in the country. People who farm work on land called cooperatives where up to 300 families can share the land. There is a huge lack of food and the government uses imports and aid from countries to help.

Specialization The act of concentrating on a limited number of goods and activities to trade Helps people and companies use resources more efficiently Allows for increased production and consumption of goods and services

Types of Trade Barriers Tariffs Taxes on imported goods Quotas Restrictions on the amount of a good that can be imported into a country Embargos Forbids or disallows trade with other countries

Currency Exchange in South and East Asia Currency is the type of money used to exchange or purchase goods The system of exchanging money internationally is called foreign exchange Currency in South and East Asia Japan – Yen Indonesia – Rupiah India - Rupee China - Yuan

Capital and Human Capital vs. GDP The knowledge and skills that allow for people to make goods and services for society Factors Training and education Capital Things that are used to make other goods Factories, technology and machines Gross Domestic Product (GDP) The total market value of the goods and services produced by a country’s economy during a specific period of time Used by economists to determine how healthy or unhealthy a country is

Human Capital, Capital and GDP The relationship between human capital and GDP is if a country has good source of human capital, the GDP tends to be higher The relationship between capital and GDP is the more capital in a country, the healthier the country is in the long term

The Impact of Natural Resources on South and East Asia Natural resources provide the region with ways to create goods and products. Some of the major natural resources of South and East Asia Coal Petroleum Rice Wheat Lumber Natural Gas

Entrepreneurship An entrepreneur is someone who has an idea for a good or service and takes risks to produce the good or service Entrepreneurs know of the risks before the product is produced Entrepreneurs help the economy to grow based on borrowing funds, use capital and human capital and natural resources More entrepreneurship would be found in East Asia, where the economy is better, than in South Asia, where many people are poor