Transcript SS7G7a,b - lfmsdevaney

SS7E7a,b,c.d
The student will describe factors that
influence economic growth and
examine their presence or absence in
Israel, Saudi Arabia, and Iran
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Gross Domestic Product: the value of all
goods and services produced in a nation
in a given year
• Human capital: the knowledge and skills
that make it possible for workers to earn a
living producing goods or services.
• More skills and education = better able to
work without mistakes and learn new skills
as technology changes
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Companies that invest in training and
education for their workers usually earn
more profits.
• Also more satisfied workers.
• Good companies try to make working
conditions safe and efficient so their
workers can do their jobs without risk.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Wealthy countries have a much higher per
capita GDP than do developing or
underdeveloped countries.
• Countries where training and education
are more easily available often have
higher production levels of goods and
services (and higher GDPs) than countries
that do not invest in human capital.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Countries in SW Asia have widely different
gross domestic product levels.
• Countries that make it possible for workers
to receive training and education tend to
be wealthier than those that do not.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Israel has wide access to education and
an economy that depends on technology
industries to make up for the lack of
natural resources.
• Many Israelis work in industries related to
medical technology, agricultural
technology, mining, and electronics.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• They also have highly developed service
industries ( businesses that supply the
needs of the rest of the working
population).
• Israel’s GDP is very high because they
have invested heavily in their human
capital.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Saudi Arabia’s main industry is as an
exporter of oil (petroleum) and petroleum
products.
• The technology of the oil industry is
complicated and requires a well-trained
and educated work force.
• Saudi Arabia also has modern
communications and transportation
systems.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• They also have enormous building
projects.
• All of these require investments in human
capital.
• Some Saudi citizens still practice
traditional economic activities such as
farming and herding animals.
• Due to the world demand for oil, Saudi
Arabia’s GDP is high.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Iran = world’s 5th largest producer of oil.
• Oil wealth has led to the use of advanced
technology that has required highly trained
workers.
• Iran has always had highly regarded
schools and universities that have meant
educated workers were available for
industry.
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• However, in recent years the Iranian
government has not always done a good
job of regulating the parts of the economy
that are under government control.
• Iran- GDP = $10,600
Lit. Rate 77%
• Israel – GDP = $25,800
Lit. Rate 97.1%
• Saudi Arabia – GDP = 23,200
Lit. Rate 78.8%
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Discuss: Relate oil wealth, GDP, and
literacy. Why if Iran is so oil wealthy does it
have a lower GDP. How does the literacy
rate affect the GDP? Israel? Saudi Arabia?
• Iran- GDP = $10,600
Lit. Rate 77%
• Israel – GDP = $25,800
Lit. Rate 97.1%
• Saudi Arabia – GDP = 23,200
Lit. Rate 78.8%
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Questions
• What is meant by “human capital”?
• Why have the Israelis made a big
investment in human capital?
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Questions
• Why would the Saudi oil industry need a
large investment in human capital?
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Questions
• What is one of Iran’s biggest problems with
their state-run oil industry?
a. Explain the relationship between investment in
human capital (education and training) and
gross domestic product (GDP)
• Questions
• If a country does not invest in its human
capital, how can it affect the country’s gross
domestic product?
b. Explain the relationship between investment in
capital (factories, machinery, and technology)
and gross domestic product (GDP)
• Capital goods are important to economic
growth
• Use of advanced technologies increases
production and makes that production more
efficient.
• Producing more goods faster and more
efficiently leads to economic growth and
greater profits (and a greater GDP).
b. Explain the relationship between investment in
capital (factories, machinery, and technology)
and gross domestic product (GDP)
• Israel: invested heavily in capital goods
(needed for their technology and industrial
production as well as for their advanced
communication systems).
• Israel has also invested heavily in
technology involved in the defense industry.
b. Explain the relationship between investment in
capital (factories, machinery, and technology)
and gross domestic product (GDP)
• Saudi Arabia: invested heavily in capital
goods, especially in technology related to
oil production, transportation, and
communication
• Iran: invested greatly in capital goods
related to oil production, technology and
communication.
• Iran also spends a great deal on its defense
industry.
b. Explain the relationship between investment in
capital (factories, machinery, and technology)
and gross domestic product (GDP)
• Questions:
• What are capital goods?
• Name three things in which Israel has
invested heavily.
c. Explain the role of oil in these countries’
economies
• Natural resources are the raw materials a
country has that make life and production of
goods possible.
• Land, water, rich soil, and minerals are all
types of natural resources.
• In SW Asia one important resource is oil.
• Some natural resources can be replaced
when they are used like trees (renewable).
c. Explain the role of oil in these countries’
economies
• Other resources like coal and oil cannot be
replaced once they are used (nonrenewable)
• Oil and natural gas are fossil fuels.
• They were created when plants and animals
that lived centuries ago decayed
underground.
• Natural gas is also nonrenewable.
• Most of the industrial nations depend on oil.
c. Explain the role of oil in these countries’
economies
• The U.S imports nearly half of all the oil it
uses ( almost 18 million barrels a day)
• Other nations do the same.
• Some other sources of power are also used
such as coal, wind power and nuclear power.
• Since so many countries rely on oil, countries
in the Middle East with large reserves of oil
have steady markets for all the oil and
natural gas they can produce.
c. Explain the role of oil in these countries’
economies
• Many of these countries have become very
rich in the last 50 years as the world’s
demand for oil and gas has increased.
• Saudi Arabia and Iran are two of the world’s
largest producers of oil.
• Over half of the world’s known supplies of oil
are found in countries in the Middle East.
c. Explain the role of oil in these countries’
economies
• Israel has few natural resources and
practically no oil at all.
• Israel has a highly developed industrial
economy so the price of oil has a huge
impact on the Israeli economy.
• Since they need oil for their industries and do
not have any to speak of, Israel has had to
find other natural resources to develop in
order to help their economy grow.
c. Explain the role of oil in these countries’
economies
• Minerals, including phosphates, are mined
commercially in Israel.
• Salts are also taken from the Dead Sea.
• Israel’s economy depends in large part on
technology rather than on the development
of natural resources.
• This means that Israel always has to
purchase oil to keep their industries going.
c. Explain the role of oil in these countries’
economies
• Other than oil, Saudi Arabia has few natural
resources.
• The production of oil and natural gas
(petrochemicals) make up the majority of
Saudi Arabia’s economic wealth.
• Saudi Arabia is very influential in the world
economy and in OPEC due to its vast oil
reserves.
c. Explain the role of oil in these countries’
economies
• They have been able to modernize
agriculture by spending billions of dollars on
irrigation and desalination technology.
• Modern cities exist where there was once
remote desert land.
• They have modernized roads, schools,
airports, and communication systems.
c. Explain the role of oil in these countries’
economies
• NOTE:
• The oil wealth of Saudi Arabia technically
belongs to the royal family, the al-Saudis.
• However they have spent enormous sums of
money to improve the standard of living for
their people.
• Saudi Arabia has gone from being a “desert
kingdom” to a modern nation in less than 100
years.
c. Explain the role of oil in these countries’
economies
• Iran’s most valuable natural resource is oil.
• They also have rich farmland and access to
water for irrigation and farming.
• Oil and petroleum products are the biggest
contributors to Iran’s varied economy.
• 85% of the government’s money comes from
the sale of oil and petrochemicals on the
world market.
c. Explain the role of oil in these countries’
economies
• Many Iranians work in other industries as
well with almost 1/3 engaged in agriculture.
• Political problems in recent years have led to
economic difficulties in spite of their vast
supply of oil.
• Iran is a member of OPEC and benefits from
that organization’s decision to keep the price
of oil on the world market at high levels.
c. Explain the role of oil in these countries’
economies
• Questions:
• Why are oil and gas such valuable natural
resources?
c. Explain the role of oil in these countries’
economies
• Questions:
• How much of the oil used by the U.S. has to
be imported every day?
c. Explain the role of oil in these countries’
economies
• Questions:
• How has the Saudi government used its
national wealth to change the country?
c. Explain the role of oil in these countries’
economies
• Questions:
• How do Iran and Saudi Arabia benefit from
belonging to OPEC?
c. Explain the role of oil in these countries’
economies
• Questions:
• How has Israel’s lack of oil affected that
country’s economy?
d. Describe the role of entrepreneurship
• Entrepreneurs are creative, original thinkers
who are willing to rake risks to create new
businesses and products.
• They think of new ways to combine
productive resources (natural, human, and
capital) to produce goods and services that
they expect to sell for a price high enough to
cover production costs.
d. Describe the role of entrepreneurship
• Entrepreneurs are willing to risk their own
money to produce these new goods and
services in the hope that they will earn a
profit.
• Success is not guaranteed; not all
entrepreneurs will make a profit.
• Many are not successful.
• Only about 50% of new businesses are still
operating 3 years after they begin.
d. Describe the role of entrepreneurship
• Question:
• What is an entrepreneur?