The Main Idea… During the 20 th century, many countries experienced major systemic changes in their economies Technological revolutions have shrunk the world and increased interdependence
Command Systems of the 20 th Century Productive resources owned and controlled by the govt Many productive resources spent and consumed by and for the military Low standard of living
Transition from Command to Market New characteristics with transition: Private property rights Profit = new motivation; spurs growth Price system allocates resources, goods, and services Competition Economic freedom
Transition from Command to Market New role of government: Protect property rights Ensure competition Provide public g/s like roads and national defense
From Command to Market Over time, many nations have evolved as mixed market systems with govts role expanding to include: Regulating businesses Correcting for externalities (i.e. pollution) Redistributing income
From Command to Market New values and priorities: Shift from social cooperation to individual freedom and responsibility
From Command to Market Challenges with transition: From collectivization to privatization Profit = brand new incentive Elimination of price ceilings on all g/s Unemployment Corruption / Increased crime Inflation / Shortage of goods Monetary system
From Command to Market Those countries which have transitioned successfully have seen increases in the standard of living for their citizens
Todays Focus How do command economies move from government ownership of productive resources to private ownership?
Case Study: China and India Complete the document based investigation on pgs. 633 – 637 Analyzing the Issue (pg. 637) – Be ready to discuss #1 and #4! How are the giant emerging economies of India and China affecting the world? What steps do you think the U.S. could take to meet the challenge of global competition?
Todays Exit Ticket 3 – challenges faced by transitioning economies 2 – positive changes that come with transition 1 – method of privatization you think is best