African Economies November 17 2014 Types of Economies

African Economies November 17, 2014

Types of Economies • Market Economy: An economic system in which business owners and consumers (people who buy stuff) make decisions about what to make, sell, or buy. • Command Economy: An economy in which the government owns most of the industries and makes most of the economic decisions • Traditional Economy: The exchange of goods or services based on custom and tradition

Mixed Economy • An exchange of goods or services based on at least two other types of economic systems. • In other words, it mixes command market, or traditional and market, or command traditional, etc. • Most countries in the world have an economy that is somewhere between a pure market and pure command economy

Economy of South Africa • mixed economy that is mostly market • There is some government control, especially over the mining industries • Very technologically advanced economy, with a heavy investment in human capital to work in the electronics and mining industries • Their main exports are gold, diamonds, machinery, and other equipment

Gold mining in South Africa • Because of South Africa’s mining industries, they have had to invest heavily in capital goods • South Africa leads other African nations in the mining and sale of gold • The government uses the profits from the gold to improve the country and help the people • However, the unemployment rate in South Africa is 24%, one of the highest on the continent • Most of the unemployed are native Africans who have not been able to recover from years of apartheid

Diamond mining in South Africa • Diamonds are South Africa’s second largest mining industry • While some African countries have had problems with their diamond mining, leading to conflict, South Africa’s is well-regulated • The South African government earns a lot of money from the diamond industry and uses it to help the people

Economy of Nigeria • Mixed economy that used to be very tightly controlled by the government but is moving toward market • However, that economy was very chaotic so the current government is trying reorganize • They should have a strong economy because of the oil industry and well-educated population • Their largest export is oil • They must import many food and agricultural products

Nigeria’s oil industry • Nigeria has invested heavily in capital goods for its oil industry • However, by spending so much money on the oil industry, the government has not supported the people of Nigeria and left many of them without proper food or housing • Also, the government concentrates on the oil industry instead of agriculture, which leads to Nigeria having to import most of its food supply

Questions • • • 1. What is a market economy? 2. What is a command economy? 3. What is a traditional economy? 4. What is a mixed economy? 5. What type of economy does South Africa have? 6. Why has South Africa invested heavily in human capital? • 7. What are South Africa’s main exports? • 8. Why did South Africa invest heavily in capital goods? • 9. What does South Africa’s government use their gold mining profits for?

More Questions • 10. What is South Africa’s second largest mining industry? • 11. What type of economy does Nigeria have? • 12. Why should Nigeria have a strong economy? • 13. What is Nigeria’s largest export? • 14. What must Nigeria import? • 15. What does the government spend the oil money on instead of spending it on the Nigerian people? • 16. Why does Nigeria have to import most of its food supply?