SS7E5 The student will analyze different economic systems.
SS7E6 The student will explain how voluntary trade benefits
buyers and sellers in Southwest Asia
SS7E7 The student will describe the factors that cause economic
growth and examine their presence or absence in Israel, Saudi
Arabia and Iran
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Compare how traditional, command, and market economies answer the
economic questions of (1) what to produce, (2) how to produce, and (3) for
whom to produce.
Explain how most countries have a mixed economy located on a continuum
between pure market and pure command.
Compare and contrast the economic systems in Israel, Saudi Arabia and Turkey
Explain how specialization encourages trade between countries.
Compare and contrast different types of trade barriers, such as tariffs, quotas,
and embargos
Explain the primary function of the Organization of Petroleum Exporting
Countries (OPEC)
Explain why international trade requires a system for exchanging currencies
between nations.
Explain the relationship between investment in human capital (education and
training) and gross domestic product (GDP).
Explain the relationship between investment in capital (factories, machinery,
and technology) and gross domestic product (GDP).
Explain the role of oil in these countries’ economies
Describe the role of entrepreneurship
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How do the traditional, command, and market economies of Southwest Asia countries
answer the economic questions of (1) what to produce, (2) how to produce, and (3) for
whom to produce?
Where are the economic systems of Southwest Asia located on a continuum between
pure market and pure command?
What are the similarities and differences between the economic systems in Israel, Saudi
Arabia, and Turkey?
How does specialization encourage trade between countries in Southwest Asia?
How are tariffs, quotas, and embargos barriers to trade in Southwest Asia?
What is primary function of the Organization of Petroleum Exporting Countries (OPEC)?
Why does international trade require a system for exchanging currencies between
nations?
What is the relationship between investment in human capital (education and training)
and gross domestic product (GDP)?
What is the relationship between investment in capital (factories, machinery, and
technology) and gross domestic product (GDP)?
What is the role of oil in economies of the countries of Southwest Asia?
What is the role of entrepreneurship in Southwest Asia?
 Every society, whether a country,
state, city, town, has an economic
system
 An economic system is how a
society organizes the production,
consumption and distribution of
goods and services
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There are three main types of economic systems
Traditional
 Found mostly in societies that are based on farming
 People produce enough goods to survive
▪ Either by farming, gathering or hunting
 Make their own clothes and tools
 Anything extra is usually traded
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Command
 Government controls what is produced, how things are produced
 Government has all the resources and dictates what is to be made and who
gets the product
▪ Decisions made on wealth, class status or by position in a waiting line
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Market
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Based on what the consumers of the country want to buy and sell
Supply and demand determines what is produced and how it is produced
People may own their own businesses
Who gets a product determines how much they can afford to buy it
NORTH KOREA
PAKISTAN
UNITED STATES OF AMERICA
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Most countries in the
world have a mixed
economy
 Most are in between
command and market
economies
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Because of growing
populations, citizens
acquiring more rights,
the addition of resources
and government
changes, countries have
moved towards mixed
economies
 Examples of
countries with
mixed
economies
 United States
 England
 France
 South Africa
Economic System of Saudi
Arabia
 Saudi Arabia started as a
traditional economy in the
1930s, but after oil was
discovered the economy
became a command
economy. The government
controls most of the oil and
it funds education, defense,
transportation and health.
In the 1980s, the country
would add power and
natural gas as businesses,
now having a mixed market
economy, with a large part
of the income coming from
private businesses, but oil
still brings in most of the
income. Saudi Arabia is
training young
entreupreners to start their
own businesses
Economic System of Israel
 Israel has a mixed market
economy, but has issues with
immigration and fighting with
other countries. The
government and private
companies control the
economy, but the country has
few natural resources, which
causes them to import many
goods. A lot of workers come
to Israel to work in service
(tourism, banking, retail).
Israel also grows its own food
and has to irrigate for water.
The United States helps out
the country in terms of
providing economic aid. Israel
also gets income from mining,
manufacturing and diamonds
Economic System of Turkey
 Turkey started with a
command economy back
in the 1920s. The
government invested in
dams, ports, railways and
roads and developed steel
and weapons production
industries. Turkey now has
a mixed market economy,
with a large farming and
textile industry. Turkey
has begun to have many
private businesses enter
the country and is a big
trader with Western
Europe. Because of trade
with Europe, they are
pushing to join the
European Union, which
would boost their
economy through loans
and funding.
 The act of concentrating on a
limited number of goods and
activities to trade
 Helps people and companies use
resources more efficiently
 Allows for increased production
and consumption of goods and
services
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Tariffs
 Taxes on imported goods
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Quotas
 Restrictions on the amount of a good that
can be imported into a country
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Embargos
 Forbids or disallows trade with other
countries
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OPEC stands for the Organization of Petroleum
Exporting Countries
12 member organization
 Iran, Iraq, Saudi Arabia and Kuwait are members from
SW Asia
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OPEC seeks to unify petroleum prices so the oil
market is stable worldwide as well makes
policies on oil trade and production
 Has control over prices, which effects prices of gas
Currency Exchange in
Southwest Asia
Currency is the type of
money used to
exchange or purchase
goods
 The system of
exchanging money
internationally is called
foreign exchange
 Currency in SW Asia
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o Israel - Israel shekel
o Saudi Arabia - Riyal
o Jordan - Dinar
o Turkey - Lira
o Afghanistan - Afghanis
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Human Capital
 The knowledge and
skills that allow for
people to make goods
and services for society
 Factors
▪ Training and education
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Capital
 Things that are used to
make other goods
 Factors
▪ Factories, technology and
machines
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Gross Domestic
Product (GDP)
 The total market value
of the goods and
services produced by a
country’s economy
during a specific period
of time
 Used by economists to
determine how
healthy or unhealthy a
country is
 The relationship between human
capital and GDP is if a country has
good source of human capital, the GDP
tends to be higher
 The relationship between capital and
GDP is the more capital in a country,
the healthier the country is in the long
term
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Oil is the most important
natural resource in
Southwest Asia
Oil affects countries
differently, depending on
their access to it
The countries that have
the most oil are usually
the controlling and
powerful countries in the
region
An entrepreneur is someone who has an idea for
a good or service and takes risks to produce the
good or service
 Entrepreneurs know of the risks before the
product is produced
 Entrepreneurs help the economy to grow based
on borrowing funds, use capital and human
capital and natural resources
 Southwest Asia is mixed with it’s
entrepreneurship, as countries are pushing to
grow private businesses
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