Mystery Nations Why Are Some Nations Rich While

Mystery Nations

Why Are Some Nations Rich While Others are Poor? • Some nations of the world have become wealthy, while others have not. • What do you think most people – say the average student in your classes – would say are possible explanations for this fact?

Gapminder. org Income per capita and – Life expectancy – Infant mortality – Malaria deaths per 100, 000 – Adult literacy notes: Circle size is proportional to population size. Color of circle indicates continent. Press “play” on bottom to see the cross section graph evolve over time.

Rank the Nations • • Use the following information to rank each nation from 1 to 5 with 1 being the richest and 5 the poorest. Can you name that nation?

Who Is Wealthy? • Country A – Size: Three tenths the size of the U. S. – Population: About 43 million (small for a nation this size) – Natural Resources: Rich resources with fertile land, lead, zinc, tin, copper, iron ore, oil, uranium • Country B – Size: About the size of California – Population: About 127 million – Natural Resources: Fish, no mineral resources

Who Is Wealthy? • Country C – Size: Twice the size of California – Population: Large population of 174 million – Natural Resources: Vast resources including oil, tin, iron ore, coal, limestone, lead, zinc, natural gas • Country D – Size: 1. 8 times the size the United States. – Population: Nearly 142 million – Natural Resources: Vast resources with major deposits of oil, natural gas, coal, many strategic minerals, vast timber supplies

Who Is Wealthy? • Country E – Size: 3. 5 times bigger than Washington D. C. – Population: 5 million – Natural Resources: Fish, deepwater port

Mystery Nations Revealed

Country A • Name: Argentina • Population: 42, 610, 981 • Per capita income: $18, 400 (Purchasing Power Parity) • Life expectancy: 77 years • Literacy Rate: 97. 9% • Infant mortality rate: 10. 24 deaths/1, 000 live births

Country B • • • Name: Japan Population: 127, 253, 075 Per capita income: $36, 900 Life expectancy: 84 years Literacy Rate: 99% Infant mortality rate: 2. 17 deaths/1, 000 live births

Country C • • • Name: Nigeria Population: 174, 507, 539 Per capita income: $2, 800 Life expectancy: 52 years Literacy Rate: 61% Infant mortality rate: 72. 97 deaths/1, 000 live births

Country D • • • Name: Russia Population: 142, 500, 482 Per capita income: $18, 000 Life expectancy: 70 years Literacy Rate: 99% Infant mortality rate: 7. 19 deaths/1, 000 live births

Country E • • • Name: Singapore Population: 5, 460, 302 Per capita income: $61, 400 Life expectancy: 84 years Literacy Rate: 95. 9% Infant mortality rate: 2. 59 deaths/1, 000 live births

Some Others Just for Fun…

USA • • • Name: United States Population: 316, 668, 567 Per capita income: $50, 700 Life expectancy: 77 years Literacy Rate: 99% Infant mortality rate: 5. 90 deaths/1, 000 live births

Saudi Arabia • • • Name: Saudi Arabia Population: 26, 939, 583 Per capita income: $31, 800 Life expectancy: 74 years Literacy Rate: 87% Infant mortality rate: 15. 08 deaths/1, 000 live births

Natural Resources Paradox • Natural resources have contributed to the economic success of some nations. • Yet, many nations with vast stocks of natural resources are poor. • If not natural resources, what then accounts for high levels of prosperity in some nations and not others?

Economic Freedom • Economists have found that • These include: – Political stability political and legal institutions are fundamental – Secure property rights to growth. – Limited government – Low regulation – Sound money – Legal systems based on the rule of law • Together these are called “economic freedom. ”

Economic Freedom • Economic freedom establishes a context which promotes long-term investments in: – Physical capital – Human capital

Econ. Ch. 2 Section 1 Economic Systems & The 3 Economic Questions Goals: 1. Identify the 3 key Economic Questions 2. Explain how social values affect the 3 Economic Questions. 3. List and define the 4 types of Economic systems.

Economic Systems • Method used by a society to produce and distribute goods and services to its people Based on how the society answers the 3 Economic Questions 1. What goods and services should be produced? 2. How will these goods and services be produced? 3. Who will consume these goods and services?

1. What goods and services should be produced? Needs like food and shelter are a given. What else? • What about national defense, education, healthcare or welfare programs? • What about the range of consumer goods? What will the society make for itself, and what will it trade for?

2. How will goods and services be produced? • How will the society divide up its resources to meet its needs and wants? • i. e. electricity- solar, fossil fuels, or nuclear? • Production Possibility Curves

3. Who will consume these goods and services? How will the society distribute the goods to their people? • By need? • By contribution to society? • By ability to pay?

Distribution of Goods & Services is tied to Distribution of Income • Distribution of income is determined by factor payments (income people receive in return for supplying factors of production) i. e. wages for labor, rent for land, interest or profits for capital • Society must also decide what its Standard of Living will be. (quality of life based on a person’s income/wages and how many possessions they have)

Economic Goals and Social Values Societies answer the questions based on their values. Economic Efficiency- Making the most out of available resources with as little waste as possible by using best production methods. Economic Freedom- Individuals are free to make their own choices with little or no government interference Economic Security & Predictability- Confidence in the availability of goods and services, wages, and the presence of safety nets for bad times. (i. e. unemployment, welfare, social security)

Goals and Values cont. Economic Equity – distributing wealth and goods fairly to all What is fair? By Needs – those who need the most get the most By Contribution – those who did the most get the most By Ability to Pay- those with the most money get the most What if someone doesn’t want to work, but is capable of working? How much should they get? What about fair wages? How do we compare nurses vs. lawyers? Truck drivers vs. Computer programmers? Societies must decide the answers to these questions themselves.

Goals and Values cont. Economic Growth and Innovation- as populations grow, the economy needs to grow as well population = jobs and goods are needed Innovation encourages improved technology = greater production of goods & services Growth also leads to higher standard of living- level of economic prosperity people experience in daily lives i. e. poverty level vs. middle class vs. wealthy

Societies take their goals and values into account when answering the Economic Questions The type of system they decide to use within their society will reflect the values and goals they believe to be most important. There are 4 types of Economic systems that have been developed in response to the questions.

4 types of Economic Systems Traditional Economy- system that is relies on customs, traditions and rituals to decide the answers to economic questions. Usually small communities, tribal, gender-based work, agriculture and hunting main sources of income and food

4 types of Economic Systems cont. Market Economy- Economic decisions are made by individuals and businesses based on trades and exchanges that are made in the marketplace without government interference

4 types of Economic Systems cont. Command Economy- also called Centrally Planned system where a central authority (gov’t) makes all the major economic decisions

4 types of Economic Systems Mixed Economy – a market based system where the individuals and business are the major players but the gov’t plays a limited role in decision making and regulating of the marketplace

Goal Check 1. What are the 3 Key Economic Questions? 2. How do social values affect the 3 Questions? 3. List and define the 4 types of Economic systems.