Unit 20
Modern World Economic
Issues
Stop and Think!
• Partner A: Identify one business that is
moving from using people to machines.
• Partner B: Identify another.
Unit 20 – Modern World Economic Issues
North
vs.
South
issues
Types of
economic
systems
Modern World Economic
Issues
International
trading
agreements
Rise of the
Pacific economic
community
Essential
Questions
I. Types of Economic Systems
TYPE
Who owns the businesses?
Who makes the economic decisions
Examples
Market (capitalism
- Adam Smith)
Private Citizens
The market
Great Britain
The government
(“the society”)
Government officials
Cuba (USSR)
Small businesses are owned by
private citizens and the large
businesses are owned by the
government
Generally the public with
some government
influence
Command
(Socialism
Communism)
Mixed
USSR under
Lenin
China under
Mao Zedong
Stop and Think!
• Partner A: Explain a market economy
• Partner B: Explain a command economy
• Partner A: Explain a mixed economy
Which heading best completes the partial outline
below?
I.
_____________________
A. Market System
B. Profit incentive
C. Entrepreneurs
1.
2.
3.
4.
Forms of government
Characteristics of capitalism
Structure of the Guild System
Elements of Culture
In a command economy, economic
decisions are mostly influenced by
1.
2.
3.
4.
Consumer demands
Government policies
Private investors
Banking practices
“A group of planners makes all economic
decisions. The group assigns natural, human,
and capital resources to the production of
those goods and services it wants. The group
decides how to produce them and to whom to
distribute them.”
This description best applies to the
1. Manorial economy of feudal Europe
2. Mercantile economy of the 1700s in Europe
3. Command economy of the Soviet Union
4. Market economy of the United States
Which statement best describes how a command
economy functioned in the Soviet Union?
1. The laws of supply and demand controlled
the economy.
2. Trade policies mandated that imports exceed
exports.
3. The success of the agricultural sector
controlled the price of manufactured goods.
4. A central authority determined the type and
quantity of goods to be produced.
Which statement describes one major
aspect of a command economy?
1. Supply and demand determines what will
be produced
2. Most economic decisions are made by
the government
3. The means of production are controlled
by labor unions
4. The economy is mainly agricultural
What has the end of communism in the
Soviet Union caused many countries in
Eastern Europe to do?
1. Shift to a command economy
2. Maintain a communist form of
government
3. Pursue free-market economic policies
4. Join the Warsaw Pact
II. International Trading Agreements
NAFTA = North American Free Trade
Agreement
An economic plan to ease trade between
Canada, Mexico, and the US
The major reason the Mexican Government
strongly supported the North American Free
Trade
Agreement (NAFTA) was that this agreement
would
1. raise tariffs on United States products entering
Mexico
2. reduce Mexico’s economic dependence on
Europe
3. promote investment and economic growth in
Mexico
4. stimulate trade between Asia and Latin
America
International Trading
Agreements
OPEC = Organization of Petroleum Exporting
Countries
An economic alliance
of oil producing nations
They determine how
much oil will be
produced  which
determines what the
price of oil will be on the
open market
The Organization of Petroleum Exporting
Countries (OPEC) is best known for its efforts to
(1) develop workable alternatives to fossil fuels
(2) bring Western oil technology to the Middle
East
(3) stop the export of oil to non-Arab nations
(4) establish production quotas to control the
price of oil
Since the creation of the Organization of
Petroleum Exporting Countries (OPEC),
member nations have joined together to
1. determine the supply of oil on the world
market
2. establish a policy of independence in
trade
3. maintain a low price of oil per barrel
4. isolate themselves from the rest of the
world
Which group of countries earns much
of their revenue from the sale of oil?
(1) China, Korea, Jordan
(2) Turkey, Brazil, Lebanon
(3) Argentina, Malaysia, Chile
(4) Saudi Arabia, Nigeria, Venezuela
International Trading
Agreements
The European Union (EU)
Many European nations joined together in an
economic association
 to make trading easier between
the nations
Their monetary unit is
now called the “Euro”
In recent years, a major success of the
European Union (EU) has been the
1. creation of a single military force
2. rejection of national sovereignty
3. adoption of a single language
4. elimination of trade barriers
Stop and Think!
• Partner B: Explain NAFTA
• Partner A: Explain OPEC
• Partner B: Explain the European Union
* Organization of American States
* European Union
* North American Free Trade Agreement
(NAFTA)
These organizations and agreements are
examples of
1. Political isolation
2. Military alliances
3. Regional cooperation
4. Collective security
III. North vs. South Issues
North vs. South? :
• NORTH – highly industrialized – high literacy rate –
high standard of living
• SOUTH – industry not yet developed – poor
education systems – much poverty
Stop and Think!
• Partner A: Explain how the northern
hemisphere seems to differ from the
southern.
“developing” nations:
• nations that are trying to become more modern
• they are often refereed to as being “Third World” nations
(The “West” = 1st World - the old Communist nations =
2nd world)
Characteristics of a developing
nation:
• Lack of modern technology
• Too much dependency on a single cash
crop
• Too much international
debt (taxes can’t help
the people → they have
to pay back loans)
Characteristics of a developing
nation:
• Lack of industry
– Few skilled workers
– Poor access to raw materials
– Little investment
money (capital)
– Political
instability
Stop and Think!
• Partner B: What is a developing nation?
• Partner A: Identify the characteristics of a
developing nation.
International Assistance
Organizations:
• These provide economic
assistance to “developing”
areas when needed
• The World Bank
• UNICEF (United Nations
Children’s Fund)
• The World Health organization
(the “WHO”)
• The International Monetary
Fund (the “IMF”)
These
provide
economic
assistance to
“developing”
areas when
needed
Stop and Think!
• Partner A: Explain 2 International
Assistance Organizations
• Partner B: Explain the other 2
IV. Rise of the Pacific Economic
Community
Re-emergence of Japan
• U.S. Occupation/Aid
AFTER WWII:
– Following WWII  the U.S. “occupied” Japan
and provided economic aid to
rebuild Japanese businesses
– The U.S. provided a market for
cheap industrial products from
Japan
The Japanese Industrial Style
• At first  they copied what worked in
other industrial nations
• Then  they developed their own
methods
– teamwork
– robotics
Why Japan had such great
industrial success
• Their Educational System: helped train
workers for industry
• There is little military: government can
focus spending on industry
• Their government helped the businesses:
– Tariffs: taxes on products coming into Japan
from other nations
– Embargoes: certain products are restricted
from being allowed into the country
Their “Balance of Trade”
• After awhile  Japan developed a
favorable “balance of trade” with the U. S.
(they made more money off the U.S. than
we made off them)
Stop and Think!
• Partner A: How did Japan rebuild after
WWII?
• Partner B: Why did they have such great
success?
• Partner A: What is a balance of trade?
Which statement concerning modern Japan
is most accurate?
1. Japan has modernized while maintaining
some elements of its traditional culture
2. Japan has become a leader in global
peacekeeping efforts
3. Japan has taken an active role in
international military events
4. Japan has severed all traditional ties in
favor of western values
A study of Japan’s economy since World War II
would lead to the conclusion that:
1. government support of technological advances
can improve a nation’s economic position
2. imperialism is necessary for the economic
development of a nation
3. a communist system leads to economic
prosperity
4. the feudal system is more economically
productive than the market system
In recent years, which factor has been a major
reason for the economic tensions between the
United States and Japan?
1. Japan’s trade deficit with the United States was
very high
2. the United States refused to place quotas on
Japanese goods
3. the United States imported more from Japan
than it exported to Japan
4. Japan lowered tariffs on goods imported from
the United States
Rise of “Asian Tigers”
• Rapidly developing nations in Asia are
known as the “Asian Tigers”
• They include: Taiwan, Hong Kong,
Singapore, and South Korea
The Future?
• China: as they convert from Communism
to Capitalism
• South East Asian nations: Vietnam –
Indonesia - Malaysia