Human Capital Capital Investments Natural Resources · O Natural resources: resources found in nature such as forest, fertile soil, and water O If countries do not have natural resources

Human CapitalCapital InvestmentsNatural Resources

SSE6E7The student will describe factors that

influence economic growth and examine their presence in Europe.

VocabularyOGross Domestic Product: Total value of all the goods

and services produced in a country in one year.O One way used to tell how rich or how poor a country isO Can be used to tell if the economy of a country is getting

better or getting worseO Raising the GDP can mean higher standard of living

O Literacy rate: the percentage of a country’s people who can read and write

SS6E7 a.  Explain the relationship between investment in human capital (education and 

training) and gross domestic product.

O Human capitalO Education, training, skills, and health of workers in a

business or countryO To increase the GDP, countries must invest in human capital

O Russia, Germany and United Kingdom have invested in human capital.

O Literacy rate in these countries is nearly 100%.O However, Russia has the most poverty of the three

countries. O In the former Soviet Union, everyone was assigned a job. O Today workers must show they are skilled and valuable

to the business in order to keep their jobs

Check for understanding1. Which is an example of investing in human capital?

a. Cash b. Factories c. Highways d. education2. A country that does not invest in human capital will have problems

becausea. There will be no money to pay its workers.b. Workers will learn on their own the skills they need.c. Businesses will not pay the taxes to pay for good schools.d. Workers who are not educated, skilled, and healthy are less

productive3. What is human capital?

a. A country’s standard of livingb. The cash a business has to spendc. Investment in the workers of a business or countryd. The buildings, equipment, and property owned a business

SS6E7 b.  Explain the relationship between investment in capital (factories, machinery, and 

technology) and gross domestic product.O Physical capital: factories, machines, technologies,

buildings, and property needed by businesses to operate.O New technology can help a business produce more goods

for a lower price.O Former Soviet Union did not do a good job of investing in

physical capital.O Not investing in physical capital can keep workers from being

productive.O Russian Federation having to invest in capital improvements.

Check for understanding1. Which is an example of investing in physical capital by a company?

a. Constructing a new factoryb. Keeping old delivery trucksc. Training workers to do their jobs betterd. Keeping old computers in order to save money

2. The Soviet Union did not invest in capital improvements, so Russian workers today

a. Do not want to increase their standard of living.b. Are not as productive as workers in other countries.c. Work in brand new factories and are very productive.d. Have shut down their factories until new ones are built.

SS6E7 c.  Describe the role of natural resources in a country’s economy.

O Natural resources: resources found in nature such as forest, fertile soil, and water

O If countries do not have natural resources they need to manufacture goods, they must import them.O This will add to the cost of goods and services.

O If a country has many natural resources, it can trade these to other countries for the goods and services it needs.O Example: United Kingdom has used most of its supply of coal.

Russia is a major exporter of oil and natural gas. Money has helped many Russians become wealthy. Caution: Resources won’t last forever. Russia must find ways to develop other ones and not use up the existing one.

Check for understanding1. Which natural resources have helped the Russian economy in the 21st

century?a. Oil and natural gasb. Highways and factoriesc. Machines and equipmentd. Education and health care

2. Why is a country better off if it does not have to import natural resources?

a. Other countries may need the resources.b. Buying from other countries costs more money.c. People in other countries don’t want to sell their natural resources.d. Businesses have a hard time using the natural resources that are

located nearby.