SS7E8: The student will analyze the different economic systems Economics in Asia SS7E8: The student will analyze the different economic systems

Economic Systems ALL economic systems must answer 3 basic questions: What goods and services will be produced? How will these goods and services be produced? Who uses the goods and services that are produced?

Types of Economic Systems: Traditional Economy: economic decisions are made based on custom and habits (they trade or barter their goods/no money is used; problem with this is people need things & are unable to barter to obtain them)

Types of Economic Systems (continued…) : Command Economy: the government makes most of the economic decisions for the workers (government decides what will be bought and sold, and what the prices will be; Example: North Korea

Types of Economic Systems (continued…) : Market Economy: economic decisions are made by individuals who decide what to produce and what to buy (the consumers and the market); also called capitalism, free enterprise, or laissez-faire (French term meaning let them do as they please)

Mixed Economies All modern economies today have characteristics of both market and command economic systems and are called mixed economies India is a good example of a mixed economy; the government makes decisions about farming and industry but free enterprise is common

Mixed Economies (continued…) China is similar to a command economy though in recent years many entrepreneurs are found there Nearly all countries today have mixed economies because they are a combination of free enterprise and some government

Economic systems of Asia: China Under Mao ZeDong, traditional farms were made into collective farms Great Leap Forward and Cultural Revolution were attempts by the Chinese to improve their economy In the 1970s the Chinese economy was changed using a program called the Four Modernizations: Farmers were given more control and were allowed to sell surplus items and keep the profits Industry shifted to the production of consumer goods Special Economic Zones were set up along the coast to encourage foreign companies to do business with China The results were mixed; Coastal areas grew but some farm areas fell behind

China Continued… Today, many Chinese have their own small businesses At least half of China’s workers remain in farming There are many examples of a market economy in China today which makes it more of a mixed economy

India Half the population works in agriculture Green Revolution - India’s attempt to modernize Indian farming; new types of seeds along with fertilizers were introduced Farm production increased but so did water pollution from the fertilizers

India Continued… Today India leads the region in the growth of technology and service industries India produces computers, software, televisions, CD players, and DVD players India has a popular movie and film industry; Bollywood films are as popular there as films made in the U.S. The success of these industries has caused India to develop a growing middle class

Japan Japan has one of the most technologically advanced economies in the world; only the U. S. and China have more productive economies The government has a close relationship with major industries and the people have a strong work ethic They are able to invest more money in technology & industry because they do not need it for the military

Japan Continued… Japan has very few natural resources or farmland Japan must import all of its oil About 1/3 of Japan’s energy is supplied by nuclear power Crops are planted in terraces carved out of the hillsides

Japan Continued… The Ministry of International Trade and Industry (MITI) helps companies decide what products will sell best on the global market; the government sets tariffs on imported goods that compete with products made in Japan Japan has one of the most highly educated populations in the world; competition for places in high school and college is hard!

North Korea North Korea has one of the least open and most government directed economies in the world The communist party controls the government and the economy with the majority of power in the hands of Premier Kim Jong-il The government owns all the land and factories and decides what jobs will be done and who will do them

North Korea Continued… North Korea has a command economy Agriculture does not produce enough food to feed the population farms are made into cooperatives (collectives) owned by the government 1990s they had several years of poor harvests and thousands faced starvation; Kim Jong-il would not take aid from the countries like the U.S. One problem with the economy of North Korea is that the government has spent millions on the military rather than investing the money in other areas of the economy