Voluntary Trade in the Middle East SS7E5 The student will explain how voluntary trade benefits buyers and sellers in Southwest Asia (Middle East).

SS7E5 a. Explain how specialization encourages trade between countries Not every country can produce all the goods and services it needs Because of this, countries specialize in producing those goods and services that they CAN provide most efficiently. They then look for others who may need those goods and services so they can sell their products to those who need them.

SS7E5 a. Explain how specialization encourages trade between countries In international trade, no country can be completely self-sufficient. Which means….no country can produce all the goods and services it needs Specialization: a country makes the products it can produce best and that are in demand on the world market This is a way to build a profitable economy and to earn money to buy items that cannot be made locally

SS7E5 a. Explain how specialization encourages trade between countries Some countries in the Middle East are very rich in oil and natural gas HOWEVER…they lack farmland and the ability to produce enough food SO…they money earned on the world market with oil is used to purchase food

SS7E5 a. Explain how specialization encourages trade between countries EXAMPLES of SPECIALIZATION: ***Saudi Arabia: produces oil and natural gas to sell at great profit on the world market. Then they turn around to and use the money made to purchase food AND the technology needed to make their agriculture system more efficient. ***Israel: has become leader in agricultural technology even though they have a limited supply of land suitable for farming. They can sell this technology to earn money to buy food they are unable to produce. IT”S ALL A TRADE OFF…

Let’s Review The Three Types of Trade Barriers!! SS7E6 b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos. Let’s Review The Three Types of Trade Barriers!! Tariff Quota Embargo All three of these are considered to be trade barriers. They slow down or prevent one country from exchanging goods with another.

Why have trade barriers? SS7E6 b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos. Why have trade barriers? To protect local industries from lower priced goods made in other countries Political problems between countries (trade would be stopped until the political issues are settled)

SS7E6 b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos. Tariff: a tax placed on goods when they are brought (imported) into one country from another country. Purpose: Make the imported good more expensive than a similar item made locally. Called a “protective tariff” because it PROTECTS local manufacturers from competition coming from cheaper goods made in other countries

SS7E6 b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos. Quota: sets a specific amount or quantity of a particular product that can be imported or acquired in a given period Purpose: a different way of limiting the amount of foreign goods that can come in to a country. EX: Israel could decide that only 1500 cars could be brought into the country from Japan in a given year. That would make it more likely that people buying cars would have to buy Israeli made cars, if Japanese cars were not available.

SS7E6 b. Compare and contrast different types of trade barriers such as tariffs, quotas, and embargos. Embargo: when one country announces that it will no longer trade with another country in order to isolate a country and cause problems with that country’s economy (an end to trade). Purpose: to punish OR persuade a country Example: Member countries of OPEC decided to stop all sales of oil and gas to the countries supporting Israel in the 1973 Arab-Israeli war.

Activity (TAG) Read your assigned trade barrier scenario as a group. Decide which trade barrier would be appropriate to use and why. What negative consequences could come of employing a trade barrier?

Activity (On-Level) It’s time to play everyone’s favorite game: NAME THAT TRADE BARRIER!

Most countries in Southwest Asia have their own type of currency. SS7E6 d. Explain why international trade requires a system for exchanging currencies between nations. Most countries in Southwest Asia have their own type of currency. In order to pay for goods as they trade with each other, they had to establish a system of changing one type of currency to another. Exchange Rate In order for them to trade with each other, they have to be able to figure out what goods cost in each currency. To sum it all up…This makes it possible to buy and sell goods between nations with different types of money.

The Turkish Lira The Saudi Riyal

Israeli New Shekel Afghanistan Afghani

Activity Use the exchange rates in the table to solve the word problems. SHOW YOUR WORK!!! USD ($) TRY (₺) ILS (₪) SAR (ريال) AFN ( ؋) USD 1 3.80 3.52 3.75 68 TRY 0.26 0.93 0.99 18 ILS 0.28 1.08 1.06 19.5 SAR 0.27 1.01 0.94 AFN 0.01 0.06 0.05

Activity Information on food cost in Afghanistan Item Cost (AFN) Cost (USD) Milk (regular), (0.25 liter) 16.89 AFN 0.25 $ Loaf of Fresh White Bread (125.00 g) 7.80 AFN 0.11 $ Rice (white), (0.10 kg) 8.75 AFN 0.13 $ Eggs (regular) (2.40) 17.02 AFN 0.25 $ Local Cheese (0.10 kg) 26.27 AFN 0.38 $ Chicken Breasts (0.15 kg) 30.96 AFN 0.45 $ Beef Round (0.15 kg) 54.60 AFN 0.80 $ Apples (0.30 kg) 30.80 AFN Banana (0.25 kg) 23.25 AFN 0.34 $ Oranges (0.30 kg) 29.57 AFN 0.43 $ Tomato (0.20 kg) 7.86 AFN Potato (0.20 kg) 6.32 AFN 0.09 $ Onion (0.10 kg) 3.12 AFN 0.05 $ Lettuce (0.20 head) 8.87 AFN