ECONOMIC UNDERSTANDING Factors that Influence Economic Growth; Human Capital & Capital (India, China, and Japan) Standard SS7E10:

The student will describe factors that influence economic growth and examine their presence or absence in India, China, and Japan. a. Explain the relationship between investment in human capital (education and training) and GDP.

Standard SS7E10: (cont.) b. Explain the relationship between investment in capital (factories, machinery, and technology) and GDP. c. Describe the role of natural resources in a country’s economy.

Standard SS7E10: (cont.) d. Describe the role of entrepreneurship.

Agenda Message: Agenda Message: Today is the start of the 4 th quarter of the school year. All students receive new schedules today. Before- school tutoring Tuesday, starting at 7:30a. Standard: Standard: Explain the relationship between investment in Human Capital (education and training of workers) and in Capital (factories, machinery, technology, roads, etc.) to GDP. Essential Question for Monday March 14 th : Essential Question for Monday March 14 th : Why are entrepreneurs important to the economic growth of China’s economy? Warm-up: Warm-up: What is the source of nearly all of Japan’s economic growth? Today We Will Today We Will: 1. Complete Factors that influence economic growth 2. Start Review of Trade Barriers

E.Q. Answer for Monday March 14 th E.Q. Answer for Monday March 14 th : In China, private business is the fastest growing segment of the economy. China’s government helps fund small business development and welcomes investment from foreign countries. Warm-up Answer Warm-up Answer: Manufacturing industry

What Influences Economic Growth? There are four factors that influence economic growth in every country causing; 1. Gross Domestic Product (GDP) to rise, as well as 2. the Standard of Living

The four factors that influence economic growth are; 1. Human Capital (education & training of people who perform labor), 2. Capital (factories, machinery, and technology), 3. Natural Resources (raw materials that come from the land like minerals), and 4. Entrepreneurship (the ideas and risk involved in starting a business).

Gross Domestic Product (GDP). Economists measure a country’s economic performance by a standard called Gross Domestic Product (GDP). GDP is the total value of goods and services produced by a country’s in a given year and converted to U.S. dollars for comparison.

A country’s GDP is used to determine the health of a country’s economy and compare it to other economies. Since Japan and China have the strongest economies in Southern and Eastern Asia, those two countries have the highest GDP’s.

Investments Pay Off How a country manages its productive resources makes a big difference in the strength of its economy. investment in human capital Clearly, investment in human capital delivers immense rewards. Studies prove that investment in education and skills training for workers leads to a higher GDP.

Education helps develop a smarter, more innovative, and more productive workforce which leads to greater economic growth. investment in capital like Economists also see a clear relationship between investment in capital like factories, machinery, roads, and technology (computers and software) and GDP.

Examples include a company building a new factory or the government building a new highway. Investment in capital equipment helps economic growth by providing workers with the best and newest tools. This makes them more productive, and increases a country’s exports and GDP.

What’s Up With India? investment in human capital In India, education and investment in human capital is a major priority of the government. The number of schools, especially at the high school level and university level, has grown dramatically in the past 25 years.

Although India’s overall literacy rate is about 60%, the rate among children 10 to 14 years of age is close to 95%. This means that India’s investment in human capital will benefit the economy greatly in the future as educated children enter the workforce.

One important aspect of Indian education is that English is taught in all schools. Careers in business, government, or science require fluency in English.

In addition, many Indians are skilled in the important field of information technology. Due to the English and computer skills of many citizens, India has become a major source of workers in the technology and service industry.

This practice involves American companies hiring Indian workers to perform jobs that used to be done in America because Indian workers can be paid lower wages than Americans. outsourcing. This practice known as outsourcing.

India’s Need for More Capital Investment While India has invested greatly in human capital, the government has neglected capital investment in the country’s infrastructure. Frequent power outages and terrible roads are just a few problems restricting India’s growth.

In many small towns, power is only available for a few hours a day so that large cities can have power 24 hours a day. Today the Indian government is undertaking a massive effort to improve India’s roads, airports, railways, and power plants.

Let’s Check on China investments in human capital Determined to modernize its economy, China has made significant investments in human capital by improving its educational system.

The number of students enrolled in college has grown tremendously over the last decade and many of them are pursuing engineering degrees. This trend is good news for China because studies show the scientists and engineers play an important role in a growing, innovative economy.

China is also investing in technical schools to train workers in necessary job skills. China’s Capital Investment China has also made important Capital investments that serve as the foundation for its growing GDP. China has poured money into manufacturing, which accounts for almost half of its GDP.

The country has also built a strong infrastructure of dependable water services, electricity, and transportation.

Japan’s Economic Journey At the end of WWII, Japan’s land and its economy were in ruins. Since then, Japan’s economy has grown to become one of the strongest in the world!

investment in human capital. One of the reasons for tremendous economic growth is Japan’s investment in human capital. Japan places an emphasis on education. Students take entrance exams to get into high schools and universities, and the competition is fierce.

Japan’s highly educated and productive labor force is a major reason for the country’s economic success. Japan’s Capital Investment capital investments. Japan has also made massive capital investments. Japan has a history of inventing new technology and providing its workers with the latest equipment.

Japan’s government has also encouraged high rates of savings by individuals and corporations by offering tax breaks. These savings have been used for capital investments like factories and machinery to fuel economic growth. Japan also has a modern, infrastructure to support its economy.

Keep Those Ideas Coming! Entrepreneurs Entrepreneurs have a vital role to play in economic growth. They are the people with new ideas for new products and services, and they use human capital, capital, and natural resources to bring ideas to the marketplace.

Entrepreneurs must be willing to take risks, and often share risks with others by borrowing money from a bank or wealthy investor to get their ideas started. Entrepreneurs are valuable because they introduce innovation and help economies adapt to the changing conditions in our world today.

The rapid pace of growth and the huge population in Asian countries offer excellent opportunities for entrepreneurs. Entrepreneurship is rising dramatically in India and China. India has a particularly high rate of business owners with training and facilities, especially in rural areas.

In China, private business is the fastest growing segment of the economy. China’s government helps fund small business development and welcomes investment from foreign countries.

Entrepreneurship in Japan In contrast, Japan has one of the lowest rates of entrepreneurship among the world’s leading economic powers. Japanese entrepreneurs face difficulties in getting loans from banks and there is little training available on how to run a business.

In addition, Japanese companies typically guarantee lifetime employment to their employees. The Japanese like this job security. They also take great pride in their position in a company and often view entrepreneurship as a risky job choice.