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Georgia Performance Standard: SS7E7 The student will describe factors that influence economic growth and examine their presence or absence in Israel, Saudi Arabia, and Iran. E.Q. How is capital Goods and human capital related to a country’s gross domestic Product?
Gross Domestic Product: (GDP)
The total value of goods and services produced in a country in a year. Must be produced, not just sold, so a BMW sold in the US, since it is made in Germany does not count towards our GDP, but it counts for Germany
Capital goods Human capital Machines, factories, technologies, etc. used in production of goods and services Employees, the humans, that produce goods and services Investing in capital goods and human capital increases a countries GDP.
Natural resources are materials and components (something that can be used) that can be found within the environment. Every man-made product is composed of natural resources.
How do you invest in Capital goods?
Investing in capital goods means that you spend money for newer or better capital with the goal of making a bigger profit. EX. Building more factories, upgrading machines, buying new technology
How do you invest in human capital?
Investing in human capital means that you spend money to train or educate your employees with the goal of making a greater profit. EX. Technology training, further personal education, etc.
Saudi Arabia And iran Some of the largest oil producers in the world
Human Capital Investment: turning out highly trained and well educated labor force particularly in the oil industry Capital Investment: Spends on goods related to oil industry, communication, and technology Iran as invests a great deal on technology for its defense industry
Israel Depends on technology industries to make up for the country’s lack of natural resources Human Capital Investment: Invests in training and technology related to medical field, agriculture technology, mining, and electronics Provides high level of training and education! Capital Investment: Includes technology, industrial, communications, and defense industry
Entrepreneur: someone who is willing to take a risk to begin a new business with the hopes of making a return on their investment These new businesses or products pump goods and services into the economy creating an increase in the country’s GDP
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