Economics of Southwest Asia (Middle East) Standard: SS7E7a-d

SS7E7 The student will describe factors that influence economic growth and examine their presence or absence in Europe. a. Explain the relationship between investment in human capital (education and training) and gross domestic product (GDP).

Factors of Economic Growth- Why does a country want to grow economically? All countries want economic growth. Economic growth means that a country is developing its economy, increasing national revenue (making money), and improving its citizens’ standard of living.

Factors of Economic Growth Factor #1- Human Capital Refers to the country’s investment in training the citizens of a country, providing educational opportunities, and providing healthcare. Think more locally- How does Georgia provide a college education to its students? Why does Georgia do this?

Investment in human capital provides a healthier and better educated workforce. Why would a country invest in human capital? When a country’s people are more productive and healthier, the economy is stronger in that country. More human capital = a stronger economy.

How Do Capital Goods Help a Country Grow Economically? Factor #2- Capital Goods Capital goods are goods used to make other goods like factories, machinery, and technology. The more capital goods a country has, the more it can produce. The more a nation produces, the more self-sufficient it is and the more money it can make.

More capital goods= more economic growth. The opposite is also true: if a country is experiencing political or economic problems and the production of capital goods decrease, there is less economic growth.

How Do Natural Resources Help a Country to Grow Economically? Factor #3- Natural Resources What is a natural resource? Nations that are rich in natural resources can export (trade) countries for revenue. Have students look at natural resources in Southwest Asia. What natural resources are found in SW Asia? How are the natural resources distributed in SW Asia?

How do you think the availability of natural resources in a country affects its economic growth? Turn and talk with your neighbor. Finish this equation more natural resources = more_____________.

How Does Entrepreneurship Help a Country Grow Economically? Factor #4- Entrepreneurship Do you remember what an entrepreneur is? Entrepreneurs help a country grow economically. Private production by individuals helps the nation to grow by creating competition between businesses. Can you think of businesses that compete by producing similar products?

How does the competition help the economy? Entrepreneurs think of new and better ways to produce their product. This innovation and invention leads to production of more product therefore providing more jobs. More jobs mean more people have money to spend. More entrepreneurship= more economic growth.

Gross Domestic Product Review the four factors which lead to economic growth. If a nation invests in these four factors, the economy will _________. If a nation produces many goods and services and therefore has a strong economy, the Gross Domestic Product is high.

DEFINE GDP The GDP of a nation is the total amount of goods and services a nation produces in a year. How do you think economic growth and GDP are connected? Write a quick response in your notebook. Discuss with the class.

Connection between GDP and a country’s economy The GDP is one way to compare countries’ economies. The higher a countries’ GDP the stronger the economy and therefore the country is wealthier. Sometimes it is easier to break down the GDP into a per person average in a country. This is called per capita income or per capita GDP. On the average this is what a person would make as an income in that country.

Southwest Asian Countries’ GDP based on per capita (per person)- 2010 Saudi Arabia- $24,200 Israel- $29,800 Bahrain- $40,300 Iraq- $3,800 Iran- $10,600 Afghanistan- $900 Kuwait- $48,900 Yemen- $2,700 United States- $47,200

Application Make a chart of these countries’ GDP per capita. You may rank lowest to highest or highest to lowest. Make a bar graph of the per capita GDP with a title for your graph. Write a paragraph describing the conclusions you have drawn from your graph.

What can you conclude about these countries’ economies? What statements can you make about certain countries’ factors of economic growth? Remember #’s 1,2,3,4 from the previous slides.

c. Explain the role of oil in these countries’ economies Do the Southwest Asian countries listed in your graph have access to oil fields? How do you think the presence or absence of oil resources in a country affects economic development? Does the presence of oil in a country make the country’s economy stronger?