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Trade and Economic

Growth
SW Asia Unit 3
Voluntary Trade
Factors involved in Voluntary Trade
1. Specialization
2. Trade Barriers
3. Currency Exchange
4. Control of Supply
Specialization
Define:
-specialization:
The products a country makes best and are
demand in the world market.

-interdependence:
A relationship between countries in which
they rely on one another for resources,
goods, or services.
Specialization

Example: Mechanics working on cars.


Specialization
EQ: How does specialization encourage
trade between countries?

If a country produces the goods they can


make most efficiently, that country can
trade them for goods made by others
that cannot be produced locally.
Trade Barriers
Definition:
The prevention of free trade
Trade Barriers
Physical Trade Barriers: (give 2 examples)
-mountains
-deserts
-lack of rivers, bodies of water
Trade Barriers
Political Trade Barriers:
-tariff
A tax placed on goods when they are brought
(imported) into one country from another
country.
-quota
A limit to the number of amount of a foreign-
produced goods that is allowed into a country.
-embargo
A formal halt to trade with a particular country
for economic or political reasons.
System for Exchanging Currency
Define:
-currency:
Paper or coins that a country uses for its
money supply.
-international trade:
Countries trading with each other to obtain
resources, goods, and services.
-exchange rate:
A system of changing one type of currency
to another.
System for Exchanging Currency

Why does international trade require a


system for exchanging currency between
countries?

So that it is possible to buy and sell goods


between nations with different types of
money.
OPEC

Organization of
Petroleum
Exporting
Countries
OPEC

Define
-supply:
The amount of a good or service available
for sale in a market.
-demand:
The amount of a good or service wanted in
a market.
OPEC
What is the primary function of OPEC?

To control the supply and price of oil.


OPEC
Give some examples of what petroleum (oil)
is used for:
cars
lawn mowers
machinery
to make plastic products
Economic Growth
4 Factors that influence Economic Growth
1. Labor
2. Capital Goods
3. Land(resources)
4. Entrepreneurship
Relationship between human capital and GDP

Define:
-GDP:
Gross Domestic Product
The value of all goods and services
produced within a country in a given
year and converted into US dollars for
comparison.
Relationship between human capital and GDP

-human capital
The knowledge and skills that
make it possible for workers to
earn a living producing goods or
services.
Relationship between human capital and GDP

Companies that invest in human capital


are more_____________________.
profitable

Countries that invest in human capital


have ______________________GDP’s
higher
because_______________________
they invest in educating and
training their citizens.
Relationship between human capital and GDP
Think- Pair-Share

Example:
Relationship between capital goods
and GDP

Define:
-capital goods
The factories, machines, and technology
that people use to make products to
sell.
3 examples of capital goods:
- oil producing technology
- communications equipment
- assembly line machinery
Relationship between capital goods
and GDP
Companies that invest in capital goods
profitable
are more__________.

Countries that invest in capital goods


higher
have _________________ GDP’s
they can produce more goods
because_________________________
in a quicker and efficient way.
Relationship between capital goods
and GDP
Think-Pair-Share
Example:
The Role of Oil in SW Asia Economy

Another name for oil is_____________.


petroleum
The Role of Oil in SW Asia Economy

Countries WITH oil in SW Asia tend to


have:
•Higher GDP
•Higher standard of living
Countries WITHOUT oil (except Israel)
tend to have:
•Lower GDP
•Lower standard of living
The Role of Oil in SW Asia Economy

Israel has very little _____.


oil However,
high GDP
Israel has a ____________________
human and
because they invested in ________
capital
___________ technology
goods for ___________
communication
and _______________ industries.
Entrepreneurship

Define:
-entrepreneur
Creative, original thinkers who are willing
to take risks to create new
businesses and products.
Entrepreneurship

risk
An entrepreneur is willing to take a_____

profit
in order to make a________________.
Entrepreneurship
Think-Pair-Share
Example
Answer EQ’s
1. What factors encourage economic growth?
2. What factors encourage trade between countries?
3. What 3 examples of Capital Goods?
4. What are factors influencing Economic Growth?
5. How does specialization encourage trade
between countries?
6. What is the primary function of OPEC?
7. Go back look at Power point write yellow
highlighted definitions.