Economies Around the World

Just as governments can be classified into different kinds…. …the economies of the world can also be classified, based on industries.

Industry An industry is all the businesses that make one kind of product or provide one kind of service. Examples: Energy/Power Industry Health Care Industry Agriculture Industry

4 Main Kinds of Industries 1. Primary 2. Secondary 3. Tertiary 4. Quaternary

Primary Industry A primary industry provides natural resources. What is a natural resource?

Primary Industry Examples: Farming Fishing Logging Mining

1 Primary Industry 1 Brings natural resources to market. Usually the natural resources are the raw materials that a secondary industry uses to make goods.

2 Secondary Industry 2 …turns a natural resource into a finished product. Examples: Clothing factories use raw wool or cotton to make clothing. Refineries turn petroleum into gasoline. Mills turn iron ore into steel.

3 Tertiary Industry 3 …sells and transports to market the natural resources of _______________and the finished products of ____________________.

Tertiary Industry Stores and trucking companies are examples of businesses in a tertiary industry. Tertiary industries provide not only goods but also services.

Tertiary Industry Examples of services: Banking Education Health care

4 Quaternary Industry 4 …involves research, information gathering, or business management. Examples: Scientists Accountants Architects Lawyers Engineers

Wait a minute… Don’t scientists, lawyers, architects, accountants, and engineers provide a service too?

Yes! Since they provide a service and information gathering, they are considered a part of the tertiary industry and quaternary industry.

Review What industry is a nurse in? Tertiary

Review What industry is the shipping business? Tertiary

Review What industry is farming in? Primary

Review What industry is an accountant in? Tertiary and Quaternary

Review What industry is a clothing manufacturer in? Secondary

“Developed or Developing?” The kinds of industries in a country can often determine whether the country is developed or developing. Countries that have well-established economies, generally with all four kinds of industries are called developed countries.

Developing Countries Countries whose economics are still being built are called developing countries. They generally have fewer kinds of industries.

GDP Developed countries have more kinds of industries, they produce more goods and services than developing one do. One measure of the total value of goods and services a country produces is its GDP, or gross domestic product.

GDP The GDP of developed countries is higher than the GDP of developing ones. Developed countries with a high GDP include the United States, whose GDP is more than 9 trillion dollars. The Caribbean country of Dominica, which is developing, has a GDP of just about 225 million dollars. The US GDP is 40,000 times larger than Dominica.

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Measure of a country’s economy 1. GDP: Gross Domestic Product 2. Standard of Living – how well its people live

Standard of Living How well a country’s people live. The standard of living can be indicated by the average person’s income and purchasing power, or spending. How much money do you have left after spending for basic needs?

Review How are economies around the world measured? By the country’s GDP and by the standard of living of the people.

Economic Systems Each country has an economic system or a way to make decisions about how to use its resources. (Examples: fish, trees, oil, coal, etc.)

Three Main Kinds of Economic Systems in the world today: 1.Traditional economy – shows little change over the years. People do the same kinds of work as people did in earlier times.

Traditional Economy Economic decisions are based on custom or habit. What have they always done? Most people in a traditional economy practice subsistence farming, raising only enough food for themselves and their families.

Subsistence farming If you only have enough food to feed yourself and your family, do you have enough to sell for money? Do you have money to buy new tools to improve your way of farming?

Subsistence Farming Since there is only enough food for survival, they must work as they always have. Traditional economies are found in many developing countries in Africa, Asia, and South America.

Three Main Kinds of Economic Systems in the world today: 2. Command Economy – the government or some central authority makes most of the economic decisions. Controls both farms and factories. People and businesses are not free to make their own decisions.

Command Economy The government determines what and how much will be produced. The government also decides how much the workers will earn and how much the goods and services will cost.

Command Economy This economic system, command economy, often leads to less than enough or too much of different products. The island country of Cuba in the Caribbean has one of the few remaining command economies in the world.

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Three Main Kinds of Economic Systems in the world today: 3. Market Economy – the people own and control businesses. The people make their own choices about which goods and services they will buy or produce. The people decide how they will spend their money and what kind of work they will do.

Market Economy This freedom of individuals and businesses in a market economy is often called free enterprise. Many countries in the world with democratic governments, including the US, have market economies.

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Canada Some democracies, like Canada, have a mix of market economy and command economy. Canada’s government has control over many parts of the country’s economy. Canada’s government controls major industries, such as broadcasting and health care.

Review How do democracies and market economies affect how people live?

Answer: People can choose their leaders and make decisions about how to spend their money.

Question 2 How would your life be different if the government chose which products you could buy?

Answer How would your life be different if the government chose which products you could buy? Answer: Some items might not be available.

Question 3 What is the difference between the economy of a developed country and the economy of a developing country?

Answer What is the difference between the economy of a developed country and the economy of a developing country? Developed countries (like the US) have a variety of industries. Developing countries have fewer industries. What is the difference between the economy of a developed country and the economy of a developing country? Developed countries (like the US) have a variety of industries. Developing countries have fewer industries.

Question 4 What are the four kinds of industries? Give an example of each?

Answer Primary - farming Secondary – clothing manufacturing Tertiary- selling or transporting goods/services Quaternary – scientist, architect Primary - farming Secondary – clothing manufacturing Tertiary- selling or transporting goods/services Quaternary – scientist, architect

Question 5 What kind of economy is usually found in democratic countries?

Answer What kind of economy is usually found in democratic countries? Answer: Market Economy What kind of economy is usually found in democratic countries? Answer: Market Economy

Question What are some benefits of free enterprise that are not found in a command economy?

Answer What are some benefits of free enterprise that are not found in a command economy? Answer: There are a greater variety of goods available to choose from.

Kinds of economy