Economics in Brazil and Cuba

All Economic Systems seek to answer the three basic economic questions 1) What to produce? 2) How to produce? 3) For whom to produce?

Command Economies Basic economic questions answered by the government (central authority)

Examples of Command economies Only two command economies left – North Korea and Cuba All others have mixed in market economy with their command structure (China) This Photo by Unknown Author is licensed under CC BY-SA

North Korea

Cuba This Photo by Unknown Author is licensed under CC BY-ND

How do Command economies answer the basic economic questions? 1) What to produce? Whatever the government says to produce 2) How to produce? However the government tells you to produce 3) For whom to produce? For whomever the government tells you to produce (ideally the entire society)

Traditional Economies Basic economic questions answered by what has been done in the past Traditions are maintained Ritual, Habit, and Custom

Traditional economies Individual roles and choices are defined by the customs of elders and ancestors These economies are usually based in societies of hunter/gatherers Sharing is a big part of these economies

How do Traditional economies answer the three basic questions? 1) What to produce? Whatever ritual, habit or custom dictates 2) How to produce? However ritual, habit or custom dictate 3) For whom to produce? For whomever ritual, habit or custom dictate

Market Economies Basic economic questions answered by consumers Dollars = Votes

How do market economies answer the three basic questions? 1) What to produce? Whatever people need and want 2) How to produce? However companies decide to produce their product 3) For whom to produce? For whomever wants to purchase their product

Pure Command Pure Market Most countries have a mixed economy located on a continuum between pure market and pure command Pure Command Pure Market

Brazil

Brazil 1. What to Produce? Brazil’s GDP is $2.396 trillion (US dollars). It is ranked 8th in the world! Brazil has the highest GDP in Latin America. The GDP per capita (value of goods and services produced per person) is $12,100.

How to Produce Literacy Rate in Brazil What percentage of the population over the age of 15 can read and write? 90.4% How long are students expected to stay in school? Most students stay in school until they are 14-15 years old.

For Whom to Produce Like most countries with democratic governments, Brazil has a mixed economic system. It’s actually closer to a market system than it is to a command one; however, there is some government regulation and control among industries (like healthcare and the postal service).

100 Economic Systems Brazil Pure Pure Market Command Place on the continuum: Brazil is a strong market economy with some command characteristics. 100 Pure Command Pure Market

Cuba What to produce? Like all countries with Communist governments, Cuba has a command economic system. The government owns all resources and property, and decides what and how much are to be produced. This Photo by Unknown Author is licensed under CC BY-NC-ND

Cuba How to produce? What’s produced in Cuba’s factories? petroleum, nickel/cobalt, pharmaceuticals, tobacco, construction, steel, cement, agricultural machinery, & sugar

Cuba For whom to produce? What percentage of the population over the age of 15 can read and write? 99.8% How long are students expected to stay in school? Males – 15 years old Females – 16 years old

Economic Systems Cuba Pure Market Pure Command Place on the continuum: Cuba is slightly on the command side of center on the continuum.

Trade Barriers Tariff – a duty levied by a government on imported or exported goods; a list of fees fares, or other prices charged by a business. Quota – a maximum number or quantity that is permitted or needed Embargos – a government order restricting or prohibiting commerce, especially trade in a given commodity or with a particular nation Why would a specific trade barrier be used and how would that trade barrier affect each country involved?

Currency Exchange Currency exchange is the price of one country’s currency compared to another. 1 US dollar = 2.33 Brazilian reals 1 US dollar = 26.5 Cuban pesos 1 Brazilian real = 11.33 Cuban pesos What does this mean? Brazil’s economy is stronger than Cuba’s, but the US’s economy is stronger than both.

Human Capital Human capital – education and training of workers whether formal or on-the-job

Gross Domestic Product (GDP) - value of all goods and services produced within a country