Economic Understandings SS7E5 The student will analyze different economic systems.

Saudi Arabia Saudi Arabia is one of the largest countries in Southwest Asia, and it is located to the south of Israel on the Arabian Peninsula. Though much of Saudi Arabia is desert, the country has rich oil reserves that allow Saudis to buy most of the goods they cannot produce themselves. The king of Saudi Arabia and his advisors make most of the decisions about how and where to use oil profits, but they have invested a lot of the nation’s wealth in technologies that allow them to produce goods they would not be able to do otherwise in a desert climate.

Turkey Turkey is located in the northwestern part of the Middle East. The city of Istanbul in Turkey is seen as the gateway to Asia from Europe, and for thousands of years, traders have crossed Turkey traveling from Europe to Asia. Turkey has the least economic freedom of the three countries. Industries such as airlines and railroads have been controlled by the government. The government has controlled the telephone and television industries, as well. However, in recent times, the government has been loosening its hold on these key businesses. More private ownership has been allowed. More laws have been passed to protect business owners.

Israel Israel is located along the Mediterranean coast and has a relatively small geographic area and almost no natural resources. Israel was founded in 1948 as a homeland for the world’s Jews, and most of the citizens are Jewish. Though they have had many problems with their Arab neighbors, Israel has good relations with much of Western Europe and with the United States. The Israelis have built an economy based on advanced technology that has allowed them to make up for much of what they lack in farmland and natural resources.

Each economic system answers the following questions: 1.What to produce? 2.How to produce? 3.For whom to produce?

Traditional Based on culture and tradition. Strong social network. Based on primitive methods and tools. Strongly connected to subsistence farming.

Market an economic system based on individual choices and voluntary trade. Governments play a minor to no role Consumers and their buying drive the economy. (supply and demand) Market determines prices and wages Also known as: Free enterprise Capitalism

Command All major decisions are made by the government or central authority.  an economic system in which the government decides what goods will be produced, how they will be produced, and how they will be distributed. Government holds the power No choice No incentives to work hard

Saudi Arabia 1.What to produce? Oil, petrochemicals, mining, refining 2.How to produce? Over 95% of oil industry is operated by government. Relies on specialized labor from other countries. Trying to increase private ownership of businesses. 3.For whom to produce? 1/3 of GDP is based on exports to other countries.

Monarchy Riyadh GDP per capita $11,400

Turkey 1.What to produce? Diversified economy with service, manufacturing, and agriculture. 2.How to produce? Moved from a government directed economy to more private enterprise. 3.For whom to produce? 1/5 of production is exported.

Ankara Republican Parliamentary Democracy GDP per capita $7, % 29.5% 24.7%

Israel 1.What to produce? Large portion comes from high tech manufacturing, financial services and agriculture. 2.How to produce? Israel has government ownership of business, but is gradually privatizing companies. 3.For whom to produce? Goods and services for domestic and international markets

Jerusalem Parliamentary Democracy GDP per capita $ 19, 500

Command, Market, Traditional? ___________________________________ Turkey SAUDI ARABIA Israel CommandMarket