ASIA ECONOMIC UNDERSTANDINGS Four Basic Economic Systems (India, China, Japan, North & South Korea) STANDARD: SS7E8a.b

ASIA Economic UNDERSTANDINGS Standard: SS7E8 – The student will analyze different economic systems. a. Compare how Traditional, Command, and Market economies answer the three economic questions of (1) What to produce, (2) How to produce, and (3) for Whom to produce.

FIRST FIVE Agenda Message: Before-school tutoring tomorrow, Tuesday starting at 7:30a. CDA-IV has been moved to Friday, Feb 27th. CDA-IV Study Guides distributed to all students Wednesday Feb. 25th. Standard: Analyze different economic systems by comparing how Traditional, Command, and Market economies answer the three basic economic questions. Essential Question for Monday, February 23rd: What are the 3-Basic Economic Questions that All economies must answer? Warm-Up: What are two additional names for a Market Economy? Today We Will: Review 3-Basic Economic Questions & Four Types of Economies The variety economies in India, China, Japan, & North Korea

answers E.Q. Answer for Monday February 25th: What goods and services will be produced? How will the goods and services be produced? Who will use the goods and services that will be produced? Warm-up Answer: Liaise-faire, Capitalism, or Free Enterprise

ASIA Economic UNDERSTANDINGS Review Every society must deal with providing goods and services for its people. Each society must also develop an economic system that can decide how to use the limited resources at its disposal in order to provide goods and services for its people.

ASIA Economic UNDERSTANDINGS Three basic “Economic” questions must be answered by all economies: What goods and services will be produced? How will goods and services be produced? Who uses the goods and services that are produced?

ASIA Economic UNDERSTANDINGS TRADITIONAL ECONOMY In a Traditional Economy, most of the economic decisions are made based on custom and habit, or how such decisions were made in the past. Goods and services are exchanged instead of using money as a payment in a traditional economy. This is also known as bartering. “No country today can be described as having a traditional economy.”

ASIA Economic UNDERSTANDINGS COMMAND ECONOMY A Command Economy is one in which government planning groups make “all” of the 3-basic economic decisions for the workers. “Command economies are associated with Communist governments.” The best example of a command economy in Southern and Eastern Asia is North Korea.

ASIA Economic UNDERSTANDINGS In North Korea the communist government owns nearly all the important industries, factories, and businesses. China is Changing Communist China was set up along a command economic system in the 1950’s after the communist revolution, however since Deng Xiaoping became Premier the country has changed to become a Mixed Market economy.

ASIA Economic UNDERSTANDINGS MARKET ECONOMY The next basic type of economic system is a Market Economy. In a market economy, economic decisions are made by individuals (the consumers) who decide what to produce and what to buy. Other names for a market economy are capitalism, free enterprise, or laissez-faire.

ASIA Economic UNDERSTANDINGS Entrepreneurs In a market economy, individuals who want to start a business may do so. They take economic risk as they invest in their new business. If the new businesses are successful, the people who organized and funded it will be a success and make a profit. If the businesses fail, the investors will lose money. Japan and South Korea have a market economy.

ASIA Economic UNDERSTANDINGS Standard: SS7E8 – The student will analyze different economic systems. b. Explain how most countries have a mixed economy located on a continuum between “pure” market and “pure” command.

ASIA Economic UNDERSTANDINGS A MIXED ECONOMY Nearly all countries today have mixed economies. In other words, they have characteristics of a free market and free enterprise as well as some government planning and control.

ASIA Economic UNDERSTANDINGS Economic Variety There are a variety of economic systems in Asia. Examples include China, North Korea, Japan, and India.

ASIA Economic UNDERSTANDINGS China China calls it’s economy a “socialist market economy.” Basically, China is changing from a command economy completely controlled by the Chinese Communist government to a mixed market economy overseen by the Chinese government.

ASIA Economic UNDERSTANDINGS To improve its economic growth, China’s government mixed in components of a market economy during the last 25 years starting with Premier Deng Xiaoping’s leadership. Those reforms have led to excellent growth in the Chinese economy.

ASIA Economic UNDERSTANDINGS China is gradually reducing government control and allowing more foreign investment. Economist predict that China may lead the world in economic strength (GDP) within the next 20 years!

ASIA Economic UNDERSTANDINGS North Korea North Korea has a command economy controlled by its Communist government. Government planning groups control all the resources and decide what will be produced and how. Farmers work on cooperatives where up to 300 families share the work.

ASIA Economic UNDERSTANDINGS Unfortunately, the North Korean economy has serious problems and the government is making some reforms and relaxing some of its controls. Due to it’s poor performing economy, massive food aid from other countries have been needed to avoid widespread starvation in North Korea.

ASIA Economic UNDERSTANDINGS Japan Japan has a mixed market economy which is one of the strongest economies in the world! With few natural resources and little farmland, Japan has built its economic success around manufacturing (especially cars and electronics).

ASIA Economic UNDERSTANDINGS Japan imports raw materials, uses them to manufacture goods like ships, cars, and electronics, and exports those goods around the world. The Japanese government owns few businesses other than the country’s major TV network, but does oversee many aspects of the economy like banking and trade.

ASIA Economic UNDERSTANDINGS India India has a mixed economy that is moving away from a command system. After independence in 1947, India’s government set up a command economy where it controlled industries and production.

ASIA Economic UNDERSTANDINGS In 1991, India began to lift some government control and allow citizens more of a role in running some of India’s industries. Although these reforms have been good for India’s economy, millions of India’s people still live in extreme poverty.