Transcript Voluntary Trade in the Middle East

Voluntary Trade in
the Middle East
SS7E6 The student will explain how
voluntary trade benefits buyers and
sellers in Southwest Asia (Middle East).
SS7E6
a. Explain how specialization
encourages trade between
countries
 Not every country can produce all the
goods and services it needs
 Because of this, countries specialize in
producing those goods and services that
they CAN provide most efficiently.
 They then look for others who may need
those goods and services so they can sell
their products to those who need them.
SS7E6
a. Explain how specialization
encourages trade between
countries
 So What Does That Mean?
 Countries trade with one another to get
everything they need for their country. In
order to do that, each country produces
what they can make the best. Then they
trade with one another.
SS7E6
a. Explain how specialization
encourages trade between
countries
 In international trade, no country can be
completely self-sufficient.
 Which means….no country can produce all the
goods and services it needs
 Specialization: a country makes the
products it can produce best and that are in
demand on the world market
 This is a way to build a profitable economy and to
earn money to buy items that cannot be made
locally
SS7E6
a. Explain how specialization
encourages trade between
countries
 Some countries in the Middle East are
very rich in oil and natural gas
 HOWEVER…they lack farmland and the
ability to produce enough food
 SO…they money earned on the world
market with oil is used to purchase food
SS7E6
b. Compare and contrast different types
of trade barriers such as tariffs, quotas,
and embargos.
EXAMPLES of SPECIALIZATION:
***Saudi Arabia: produces oil and natural gas to sell at
great profit on the world market. Then they turn around
to and use the money made to purchase food AND the
technology needed to make their agriculture system
more efficient.
***Israel: has become leader in agricultural technology
even though they have a limited supply of land suitable
for farming. They can sell this technology to earn
money to buy food they are unable to produce.
IT”S ALL A TRADE OFF…
Activity
 Think back to the country you created
designing a new government. What
resources does your country have and
given this what do they specialize in?
What resources does your country lack
and given this, what do they need to
import?
SS7E6
b. Compare and contrast different types
of trade barriers such as tariffs, quotas,
and embargos.
Let’s Review The Three Types of Trade Barriers!!
1. Tariff
2. Quota
3. Embargo
All three of these are considered to be trade
barriers. They slow down or prevent one
country from exchanging goods with another.
SS7E6
b. Compare and contrast different types
of trade barriers such as tariffs, quotas,
and embargos.
 Why have trade barriers?
 To protect local industries from lower priced
goods made in other countries
 Political problems between countries (trade
would be stopped until the political issues
are settled)
SS7E6
b. Compare and contrast different types
of trade barriers such as tariffs, quotas,
and embargos.
 Tariff: a tax placed on goods when they
are brought (imported) into one country
from another country.
 Purpose: Make the imported good more
expensive than a similar item made locally.
 Called a “protective tariff” because it PROTECTS
local manufacturers from competition coming from
cheaper goods made in other countries
SS7E6
b. Compare and contrast different types
of trade barriers such as tariffs, quotas,
and embargos.
 Quota: sets a specific amount or number of a
particular product that can be imported or
acquired in a given period
 Purpose: a different way of limiting the amount of
foreign goods that can come in to a country.
 EX: Israel could decide that only 1500 cars could
be brought into the country from Japan in a given
year. That would make it more likely that people
buying cars would have to buy Israeli made cars, if
Japanese cars were not available.
SS7E6
b. Compare and contrast different types
of trade barriers such as tariffs, quotas,
and embargos.
 Embargo: when one country announces that it
will no longer trade with another country in
order to isolate a country and cause problems
with that country’s economy.
 Purpose: to punish OR persuade a country
 Example: Member countries of OPEC decided to
stop all sales of oil and gas to the countries
supporting Israel in the 1973 Arab-Israeli war.
Activity
 Match the term/definition/example then
Fill in your sheet
SS7E6
d. Explain why international trade
requires a system for exchanging
currencies between nations.
 Most countries in Southwest Asia have their own
type of currency.
 In order to pay for goods as they trade with each
other, they had to establish a system of changing one
type of currency to another.
 Exchange Rate
 In order for them to trade with each other, they have to be able
to figure out what goods cost in each currency.
 To sum it all up…This makes it possible to buy
and sell goods between nations with different
types of money.
The Iraqi Dinar
The
Saudi
Riyal
Israeli Lira
Iranian (Persian) Rial
Activity
 Use the exchange rates in the table to solve the
word problems.




Answer: ₤34.65
Work: 100 x 1.83 = 183
183 −120 = 63
63 x .55 = 34.65
 Answer: $34.80 CAD
 Work: 20 x 1.74 = 34.80
Activity
 Read your trade barrier scenario then
discuss with your table and fill in your
sheet