Aim: Economic Issues Visualizing Global History Mr. Oberhaus Regents Review Unit 7 Section 2

Market vs Command Economies Market EconomyCommand Economy OwnershipAll property, including the means of production is privately owned. The government owns the means of production, distribution, and exchange Economic Decisions Private businesses and individuals are free from public control so that they can make basic decisions including what, where, how much, and price for goods Government officials make all basic economic decisions, such as what will be produced, when, and where Market Controls Prices are determined by supply and demand. Competition promotes high quality and low prices. The government plans the economy. There is limited production of consumer goods and an emphasis on industrial growth.

Economies of Developing Nations After WWII, The United States, the Soviet Union, and Japan and most of the countries of Western Europe were known as Developed Nations. They had modern agriculture, industries, advanced technology, and strong educational systems. Nations with limited resources and without modern industrial economies were known as developing nations. Economic obstacles including overpopulation, natural disasters, and indebtedness. Each of these developing nations had similar goals; building industry, improving agriculture, and controlling population.

India In 1947, India developed a mixed economy that combined elements of market and command economies. Heavy industry was brought under government control and the nation worked with a series of five-year plans to build their economy. India lacked oil and natural gas which slowed their growth. Agricultural growth did not keep up with population growth. During the 1990s, pressure from lenders forced India to institute reforms. Some industries were privatized and foreign investment was made easier.

Egypt Nasser installed a socialist government and economy. He nationalized all banks and businesses and gave peasant farmers land. The Soviet Union helped build the Aswan Dam to control the Nile River. However, the dam made the Nile more salty and eroded the soil in the region. Nasser’s successor, Anwar Sadat instituted a market economy. He was assassinated in Hosni Mubarak came to power. He ruled through 2012 when he was overthrown.

West Germany With the help of the Marshall Plan and leadership from a democratic government West Germany was able to recover from WWII. West Germany rebuilt their cities and factories and developed a strong industrial economy. The economic recovery was known as the “Economic Miracle”. After East and West Germany united in 1990, East Germans struggled to make the transition to a market economy.

European Unification European Coal and Steel Community: In 1952, France, West Germany, Belgium, Italy, the Netherlands, and Luxembourg set up the this community to regulate the coal and steel industries and spur economic growth. The Common Market: In 1957, the same nations formed the EC or Common Market. They expanded free trade by ending tariffs. Later they were joined by Great Britain, Denmark, and Ireland European Union: In 1993, the EC expanded and became the European Union. They had 27 member states including Hungary and Poland. A new currency was designed, the “Euro” in 1999.

Japan As An Economic Superpower The American occupation of Japan officially ended in Japan’s economy rebounded quickly, as they began exporting manufactured goods overseas. They quickly had a Favorable Balance of Trade or exporting more than they imported. Japan was so successful because: – They adapted the latest western technology – They had a well educated and highly skilled work force – Their banks had capital to invest in industry – The government was prohibited from spending money on defense – The government imposed high tariffs and strict regulations to limit competition

The Pacific Rim Taiwan: At first they set up light industry such as textile factories but in time heavy industry developed and created a trade boom, the growth of industrial cities and a higher standard of living. Hong Kong: A small island, formerly controlled by Britain. In 1997, they were returned to Communist China but allowed to retain a capitalist economy. Hong Kong is a major financial center. Singapore: Is a city state located on a tiny island at the tip of the Malay Peninsula. Singapore includes one of the world’s busiest harbors and is a center of trade. South Korea: Initially exported textiles and inexpensive goods. By the 1990s, South Korea was an economic powerhouse, exporting such higher priced goods such as automobiles.

Oil and OPEC Oil was the most important energy resource after WWII. Global Economic interdependence is shown in the crises that have developed over oil. Much of the world’s oil comes from the Middle East. The Formation of OPEC: In 1960, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela formed OPEC, whose initials stand for the Organization of Petroleum Exporting Countries. Other oil producers joined later and in 2009, there were 12 members. OPEC’s goal was to control the oil industry by setting production levels and prices. OPEC and Oil Crises: In 1973, OPEC nations halted exports of oil to certain countries. Egypt and Israel were at war. Arab countries declared an oil embargo against the United States. Oil prices skyrocketed until the 1980s and 1990s.

Summary In the years after 1945, some countries developed market economies while others developed command economies. Developing nations struggled to build their economies. Western Europe and Japan, with the help of the United States achieved economic success. Through international trade, the Pacific Rim became important to the global economy. Interdependence characterized the world economy. Oil crises in the Middle East slowed western economic growth.