WHAT IS ECONOMICS???

● ALLOCATION AND DISTRIBUTION OF RESOURCES

● ADDRESS AND SATISFY THE UNLIMITED HUMAN WANTS AND NEEDS

What is the “Central Problem” of
Economics?
How do we efficiently allocate and
distribute?
We have to answer the 4 Basic Economic Questions:
1. What to produce?
2. How much to produce?
3. How to Produce?
4. For Whom?
Who Will Answer those Fundamental Economic
Questions?
Free Market

I answer the basic economic questions!

I determine how much Tapioca pearls on the Milk Tea
I determine the quality of the Tapioca pearls and black tea
I set my employees wages
I set my business hours
Command Economy
The government answers the basic economic questions
The government sets the amount of Tapioca pearls on the Milk
Tea
The government determines quality of Tapioca pearls and black
tea
The government sets employees wages
The government sets business hours
Mixed Economy
The Government and I both answer the basic economic
questions
I determine the amount of Tapioca pearls on the Milk Tea;
government determines the quality of the Milk Tea
I set employee wages; government sets minimum wage for
employees
I determine business hours; government determines whether I
am safe to be open or not
ROLE OF THE GOVERNMENT
1. PROVIDE A POLICY

2. REGULATE

3. PUBLIC ENTERPRISE (GOCCs)

4. INFRASTRUCTURE DEVELOPMENT
Economic Freedom Index
(Heritage.org/index)
Economic Freedom (heritage.org/index)
1. Rule of Law (property rights, government integrity, judicial effectiveness)
2. Government Size (government spending, tax burden, fiscal health)
3. Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
4. Open Markets (trade freedom, investment freedom, financial freedom)

Economic freedom is the fundamental right of every human to control his or her own
labor and property. In an economically free society, individuals are free to work,
produce, consume, and invest in any way they please. In economically free societies,
governments allow labor, capital, and goods to move freely, and refrain from coercion
or constraint of liberty beyond the extent necessary to protect and maintain liberty
itself.
THE FOLLOWING COUNTRIES ARE THE
PRIMARY ECONOMIC POWERHOUSE OF
THEIR REGIONS

AT THE END OF THE DISCUSSION YOU

ARE GOING TO PROVIDE A WORKING
DEFINITION OF ECONOMIC
POWERHOUSE
EAST ASIA ECONOMIC SYSTEM Economic Freedom Index

CHINA FREE MARKET CAPITALIST ECONOMY 59.5 (Mostly Unfree)

JAPAN FREE MARKET CAPITALIST ECONOMY 73.3 (Mostly Free)

TAIWAN FREE MARKET CAPITALIST ECONOMY 77.1(Mostly Free)

S. KOREA FREE MARKET CAPITALIST ECONOMY 74 (Mostly Free)

China ( Li, 2009)
China Incentivizes

- Any residual revenue from quota

will remain to the peasants

- State Owned Enterprise Economic

Managers will keep the residual
amount from the revenue.
Privatization of underperforming
State owned Enterprises (Except
for Banking, Energy, Aviation,
Telecom, Weapon, Tobacco,
Railroad). Some are PPP.
Largest Manufacturing Base (Export powerhouse)
 PRIMARY ISSUES
Rule of Law:

Issues in Intellectual Property Rights

Transparency

CCP influencing Judicial System

Commercial Disputes

Corruption
 Japan
Mature democracy and
Advanced free market
economy
1868 Meiji Restoration
(Traditional Economy to
Modernization)
From Feudal state to Imperial centralized
state.

Resist Western policies

Improved and intensified the Industrialization

Zaibatsu (Elite Family Owned Corporations)

“Enrich the Country, Strengthen the Military”

Democratization Reform after WWII

Keiretsu

- Business relationship
- Combination of Independent
companies
 Taiwan
Adopted Free Market Capitalism
from its inception (Kuomintang
Party)
Export Economic policy
- Developed manufacturing industries
- High tech electronics, Machinery and
tools, & Petrochemicals
Small firms Adaptable, Flexible and
resilient
 South Korea
1. Free Market Economy from Park Chung-hee
leadership in 1961
- Ordered large firms to work not merely for
profit but for the country’s welfare
- Invested in industries and technologies by
enhancing their exports while restricting
imports
Chaebols - family run businesses with
close relation with the government
SOUTHEAST ECONOMIC SYSTEM Economic Freedom Index

SINGAPORE FREE-MARKET CAPITALIST ECONOMY 89.4 (Free)

BRUNEI FREE-MARKET CAPITALIST ECONOMY 66.6 (Moderately Free)

MALAYSIA FREE MARKET CAPITALIST ECONOMY 74.7 (Mostly Free)

 Singapore
1. Free Market Policy (Pro-development)
- Investor-friendly business environment
2. Major Trading Port
3. Low Government Corruption (Least
corrupt in Asia)
4. Export Economy
- Electronics, IT products, Medical and
pharmaceutical products
5. Best Services: transportation, Business
and Financial
 Brunei
90% of Gov’t revenue and
exports come from Oil and
Gas

Import-dependent nation to
satisfy its food productions
 Malaysia
1. Manufacturing sector (exporter of
rubber, crude and kernel palm oil)
2. Service Sector (Tertiary)
- Health Tourism (Healthcare travel):
Cardiology and Fertility treatments
- 2018: $362 million revenue
- Tourism $20 million in 2019
SOUTH ASIA ECONOMIC SYSTEM Economic Freedom Index

INDIA FREE MARKET 56.5 (Mostly Unfree)

CAPITALIST ECONOMY

PAKISTAN FREE MARKET 54.8 (Mostly Unfree)

CAPITALIST ECONOMY
 Major Exporter of IT related
services BPO and software
India
1. Privatization of Banks issues
(Bad loans)
2.
- State interventionism is largely
seen domestically but liberalize
its foreign economy (Dirigisme)
3. 60% GDP from Service sector
 Pakistan
1. Agriculture (wheat, rice, sugarcane, cotton) and Industries
(manufacturing surgical instruments like scalpels, retractors
etc) accounted for 40% of GDP
2. Service sector in ICT make up of at least 50% of their GDP
- 1, 500 IT companies with 10K IT graduates being employed
every year.(New York Times)
https://www.nytimes.com/2015/08/11/opinion/bina-shah-
pakistan-the-next-software-hub.html
The country is engulf of
corruptions, money
laundering, financing terrorism
and High Tariffs and lack of
protection of property rights.
CENTRAL ASIA ECONOMIC SYSTEM Economic Freedom Index

KAZAKHSTAN FREE MARKET CAPITALIST 69.6 (Moderately Free)

ECONOMY

UZBEKISTAN PLANNED/COMMAND 57.2 (Mostly Unfree)

ECONOMY
 Kazakhstan
1. Oil and Gas productions are the
primary revenue of the Gov’t
- Hydrocarbon exporter
- Asia’s largest producer of Uranium
2. Land area: 2.7 million square km
for 18 million population
At least 60% of their GDP comes from
exports and imports total value.
Uzbekistan
1. Undergoing Economic Transformation
(2016)
- Death of former President Islam
Karimov (1989-2016)
- Shavkat Mirziyoyev
2. The economy of Uzbekistan
- Gas and oil productions
- Cotton industry
SOUTH WEST ASIA ECONOMIC SYSTEM Economic Freedom Index

SAUDI ARABIA FREE MARKET CAPITALIST 62.4 (Moderately Free)

ECONOMY

IRAN PLANNED/COMMAND 49.2 (Repressed)

ECONOMY
 Saudi Arabia
1. Leading producer of oil
- Produces 11.81 million barrels per day and
consume 3.33 million b/d
- 95% of oil industry is state-run
- 33% of GDP based on exports
- At least 85% of Gov’t revenue comes from Oil
exports

https://www.eia.gov/tools/faqs/faq.php?id=709&
t=6
1. Industrial production
- petrochemical , mining and refining
2. Dependent on other countries on
specialized labor
Govt Integrity Issues

Corruption and

Inefficient Judiciary
 Iran
“The state sector is to include all large-scale and mother industries, foreign trade, major minerals,
banking, insurance, power generation, dams and large-scale irrigation networks, radio and television,
post, telegraph and telephone services, aviation, shipping, roads, railroads and the like; all these will
be publicly owned and administered by the State.” Art. 44 Constitution

1. One of the leading oil and natural gas producers in the world
- Producing 3.19 million b/d while consuming 1.8-2 million b/d
Bonyads - a semi governmental/
quasi-public institution that works as
charitable, military and religious
organization establishing non-oil
economy such as Hotels, Cotton
Industry and other businesses.
Revenues are aim to redistribute to
the underprivileged members of
their nation. Having an autonomy
and subsidized by the government
and religious fund.
 Post-discussion Activity
Search and choose a news article on any Economic topic in the world today. Write a
persuasive editorial discussing its background and expressing your viewpoints.
Once you have identified a specific topic or news article/s, write your editorial using the
following questions and guidelines;

1. What is the primary economic system involved?

2. Would you agree or support the economic policy being discussed in your chosen
article?
3. Would you agree that global economic integration is inevitable regardless of an
economic system? Why?
References

Li, S. (2009). Managing international business in relation-based versus rule-based countries. New York, NY:
Business Expert Press.

https://www.nytimes.com/2015/08/11/opinion/bina-shah-pakistan-the-next-software-hub.html

Ali A. Saeidi, “The Accountability of Para-governmental Organizations (bonyads): The Case of Iranian
Foundations,” Iranian Studies, vol. 37, no. 3 (September 2004), pp 479-498.