Middle East Unit Three Government & Economics. A nation’s type of government refers to how that state’s executive, legislative, and judicial organs.

Middle East Unit Middle East Unit ThreeThree

Government & Government & EconomicsEconomics

A nation’s type of government refers to how that state’s executive, legislative, and judicial organs are organized. All nations need some sort of government to avoid anarchy. Democratic governments are those that permit the nation’s citizens to manage their government either directly or through elected representatives. This is opposed to authoritarianauthoritarian governments

that limit or prohibit the direct participation of its citizens.

COMMUNISMCOMMUNISM

a theory advocating elimination of private property.a theory advocating elimination of private property.   a system in which goods are owned in common and a system in which goods are owned in common and

are available to all as needed.are available to all as needed. Typically a one party system in which all political Typically a one party system in which all political

power rest with the party (i.e. China). power rest with the party (i.e. China).

TheocracyA form of government in which God or a deity is recognized as the supreme civil ruler. Often religious institutional representatives (i.e.: a church), replaces or is mixed into the civilian government. Can be an Oligarchy, Representative Democracy, and even a Monarchy.

Unitary government system – the central government holds nearly all of the power.Local governments such as state or county systems may have some power at certain times, but they are basically under the control of the central government.Central government has the power to change the way state or county governments operate or abolish them altogether.Some unitary governments have elected officials who, once elected, may make and enforce laws without taking the opinions of those at lower levels of government into consideration.In a monarchy (area ruled by a king or emperor), the ruler and his advisors make most of the decisions – this is an example of a unitary governmentSaudi Arabia is a monarchy and is an example of a unitarygovernment

Blue Countries are Unitary

Federal government systemFederal government system – a political system in which – a political system in which power is shared among different levels of governmentpower is shared among different levels of government..

The states have some powers that the federal government The states have some powers that the federal government does not have such as the right to collect property taxes and does not have such as the right to collect property taxes and determine sales taxes.determine sales taxes.

The national government (or central government) also has The national government (or central government) also has some powers that the state does not, such as the right to some powers that the state does not, such as the right to declare war and make treaties with foreign countriesdeclare war and make treaties with foreign countries

In the Middle East, Israel is anIn the Middle East, Israel is an example of a Federal governmexample of a Federal governmentent

A confederation government system is one in which the local governments hold all of the power and the central government depends on the local governments for its existenceThe central government has only as much power as the local governments are willing to giveThe United Nations is a good example of a confederationThe United Nations can only offer advice and assistance when the member nations agree to cooperateThis organization is a regional group organized to help the member countries cooperate on economic matters, encourage cultural exchanges, and to help keep peace and stability in the regionIn the Middle East, the Organization of Petroleum Exporting Countries (OPEC) is an example of a Confederation government

An autocratic government is one in which the ruler has absolute power to do whatever he wishes and make and enforce whatever laws he choosesIndividuals who live under autocratic governments do not have any rights to choose leaders or vote on which laws are made and put into practiceSome autocratic governments may allow the people rights in certain areas like managing local affairs, but the central governments keeps control of all the most important aspects of the country’s lifePeople usually have little or no power to use against the government if they disagree with decisions that government or ruler has madeA monarchy such as Saudi Arabia, where the king has ultimate power, is one example

AnAn oligarchy oligarchy means “government by the fewmeans “government by the few.”.” In this form of government, a political party or other small group takes In this form of government, a political party or other small group takes

over a government and makes all of the major decisions.over a government and makes all of the major decisions. The The people of the country have little choice but to go along with the people of the country have little choice but to go along with the

decisions they makedecisions they make This sort of government can be very similar to an autocratic This sort of government can be very similar to an autocratic

government.government. Iran could be described as an Iran could be described as an oligarchy, oligarchy,

because a small group of because a small group of religious and political leaders religious and political leaders makes makes many of the important decisions many of the important decisions

In a In a democratic government systemdemocratic government system, the people play a much greater , the people play a much greater role in decided who the rulers are and what decisions are maderole in decided who the rulers are and what decisions are made

Democracy comes from the Greek word “demos,” which means Democracy comes from the Greek word “demos,” which means “people.”“people.”

In this form of government, a great deal of power is left in the hands In this form of government, a great deal of power is left in the hands of the peopleof the people

People who live in a democracy generally recognize that there must People who live in a democracy generally recognize that there must be some rules to organize society, but the goal is to leave as much be some rules to organize society, but the goal is to leave as much individual freedom as possible.individual freedom as possible.

Decisions are often made by a majority of Decisions are often made by a majority of votes, votes, but there are also laws in place to protect but there are also laws in place to protect individual individual rights.rights.

In the Middle East, Israel is a good example In the Middle East, Israel is a good example of a of a democracydemocracy

Those organizing the new government of Iraq Those organizing the new government of Iraq are hoping to establish a democratic systemare hoping to establish a democratic system

In a In a parliamentaryparliamentary form of democratic form of democratic government, the people vote for those who government, the people vote for those who represent represent the political party they feel best the political party they feel best represents represents their views of how the government their views of how the government should operate.should operate.

The legislature they elect, The legislature they elect, parliamentparliament, makes , makes and carries out (enforces) the laws for the countryand carries out (enforces) the laws for the country..

The leader of a parliamentary form of government is usually chosen The leader of a parliamentary form of government is usually chosen by the party that winds the majority of representatives in the by the party that winds the majority of representatives in the legislature.legislature.

This leader is often called a This leader is often called a prime ministerprime minister or or premierpremier and is and is recognized as the head of the government.recognized as the head of the government.

The prime minister leads the executive branch of the government and The prime minister leads the executive branch of the government and must answer directly to the legislature for the actions and policies must answer directly to the legislature for the actions and policies recommended.recommended.

In many parliamentary governments, a head of state (president or In many parliamentary governments, a head of state (president or king/queen) serves as ceremonial leaderking/queen) serves as ceremonial leader

The actual work of the parliament is led by the prime The actual work of the parliament is led by the prime minister, who represents the leading political party in the minister, who represents the leading political party in the country.country.

He or she rules with the help of a He or she rules with the help of a cabinetcabinet, or group of , or group of advisors.advisors.

A prime minister may be votes out of office if the party he A prime minister may be votes out of office if the party he or she leads lose poweror she leads lose power

In the Middle East, Israel has a parliamentary governmentIn the Middle East, Israel has a parliamentary government Its citizens elect representative to the national parliament Its citizens elect representative to the national parliament

called the Knesset.called the Knesset. The political party that gets the most votes in the Knesset The political party that gets the most votes in the Knesset

gets to choose the Prime Ministergets to choose the Prime Minister

A presidential form of democratic government has a president, or chief executive, that is chosen separately from the legislatureThe legislature passes the laws, and it is the duty of the president to see that the laws are enforcedThe president holed power separately from the legislature, but he does not have the power to dismiss the legislature or force them to make particular lawsThe president is the official head of the governmentThe legislature does not have the power to dismiss the president, except in extreme cases when the president has broken a lawThe president is BOTH the lead of state and the head of the government

IranIran In 1979, the Islamic, or Iranian, revolution In 1979, the Islamic, or Iranian, revolution

overthrew the monarchy that had ruled Iran for centuries.overthrew the monarchy that had ruled Iran for centuries. Today, Iran is a theocratic republic.Today, Iran is a theocratic republic. This means that the government is based on religious This means that the government is based on religious

principals (Islam) and the wishes of its people.principals (Islam) and the wishes of its people. The head of state is the Supreme Leader, who is always The head of state is the Supreme Leader, who is always

an an ayatollah, or recognized religious authority., or recognized religious authority.

The Supreme Leader is chosen by the Assembly The Supreme Leader is chosen by the Assembly of Experts and holds the position for life.of Experts and holds the position for life.

The assembly consists of 86 religious scholars.The assembly consists of 86 religious scholars. The people elect the assembly and the The people elect the assembly and the

president by popular vote.president by popular vote. The president governs based on the religious The president governs based on the religious

guidance of the ayatollah.guidance of the ayatollah. The supreme leader has final say over many of the The supreme leader has final say over many of the

president’s decisions.president’s decisions. The president can serve two terms of four years each. The president can serve two terms of four years each. Iran’s legislature is called the Consultative assembly.Iran’s legislature is called the Consultative assembly. Citizens 16 Citizens 16 and older can vote for the 290 members of the and older can vote for the 290 members of the

Assembly.Assembly.

IsraelIsrael Israel has a representative parliamentary democracyIsrael has a representative parliamentary democracy.. The head of state is the president, who actually does not The head of state is the president, who actually does not

have much power.have much power. The Israeli prime minister is the head of the government.The Israeli prime minister is the head of the government. The legislature elects the president.The legislature elects the president. The president then chooses the head of the largest political The president then chooses the head of the largest political

party to be the prime minister.party to be the prime minister. The prime minister must organize a coalition to govern.The prime minister must organize a coalition to govern. A coalition is a group of several different political parties A coalition is a group of several different political parties

that have to cooperate in order to make decisions.that have to cooperate in order to make decisions.

This type of government is known as a coalition government.

The Israeli legislature is called the Knesset. The Knesset holds most of the power in the Israeli

government. Israelis eighteen and older elect these officials by popular

vote. While most of Israel’s Jewish citizens see themselves as

secular, meaning they do not feel the country’s laws should be based solely on religious beliefs, many Israeli laws are influenced by the Orthodox Jews, those who want government policy to be made according to religious law

These people represent about 25 percent of the Israeli population.

Elections are held in Israel every four years

Saudi ArabiaSaudi Arabia Saudi Arabia's government is one of the few absolute Saudi Arabia's government is one of the few absolute

monarchies in the world today.monarchies in the world today. The government is a monarchy The government is a monarchy governed by Islamic Shari’a governed by Islamic Shari’a

Law.(law based on the Quran)Law.(law based on the Quran) In 2004, however, the Saudi government began allowing In 2004, however, the Saudi government began allowing men men

who are 21 and older to vote for half of their local officials.who are 21 and older to vote for half of their local officials. Men can also vote for one-third of the members of the Men can also vote for one-third of the members of the

legislature.legislature. The king has a cabinet called the Council of Ministers.The king has a cabinet called the Council of Ministers. The Council mostly consists of members of the royal familyThe Council mostly consists of members of the royal family.. The Saudi legislature is called the Consultative Council.The Saudi legislature is called the Consultative Council. The king chooses two-thirds of the members of the Council.The king chooses two-thirds of the members of the Council.

Saudi Arabia is ruled by a Saudi Arabia is ruled by a hereditary monarchy, which means the hereditary monarchy, which means the government is led by a king who comes from a family that has ruled government is led by a king who comes from a family that has ruled the country for several generations.the country for several generations.

The King of Saudi Arabia has been a member of the al-Saud family The King of Saudi Arabia has been a member of the al-Saud family since the 1920’s.since the 1920’s.

The king and his advisors, many of whom are his family members or The king and his advisors, many of whom are his family members or influential business and religions leaders in the country, make the influential business and religions leaders in the country, make the lawslaws

There is no written constitution, and the king rules for lifeThere is no written constitution, and the king rules for life The people of Saudi Arabia do not choose the kingThe people of Saudi Arabia do not choose the king When a king dies, the Saudi family announces who the next king will When a king dies, the Saudi family announces who the next king will

be from among their male family membersbe from among their male family members Conservative religious leaders also have a great Conservative religious leaders also have a great

deal of influence in decisions made by the deal of influence in decisions made by the monarchy monarchy

Religion and Southwest Asian GovernmentsReligion and Southwest Asian Governments In the United States and many western nations, religion and politics tend to In the United States and many western nations, religion and politics tend to

be separate.be separate. In much of the Middle East, however, religion and politics are often mixed.In much of the Middle East, however, religion and politics are often mixed. Countries like Iran based their systems of gov’t on religion.Countries like Iran based their systems of gov’t on religion. Religion is important even in countries that don’t base their governments on Religion is important even in countries that don’t base their governments on

religion.religion. Many political parties in the Middle East are religiousMany political parties in the Middle East are religious Many parties represent different branches of Islam.Many parties represent different branches of Islam. Since the majority of the people in the region are Muslim, religion also Since the majority of the people in the region are Muslim, religion also

influences the way people voteinfluences the way people vote Israel is a democratic state, but it was founded as a Jewish homeland.Israel is a democratic state, but it was founded as a Jewish homeland.

Water is a natural resource that is distributed unevenly in Water is a natural resource that is distributed unevenly in the Middle East. the Middle East.

Some countries, like Turkey and Iraq, have major rivers that Some countries, like Turkey and Iraq, have major rivers that provide enough drinking water for farming communities. provide enough drinking water for farming communities.

These two countries These two countries share the Tigris and share the Tigris and Euphrates river Euphrates river systems. systems.

Water SupplyWater Supply

Southwest Asian countries often get into disputes over their Southwest Asian countries often get into disputes over their policies on water rights and other natural resources.policies on water rights and other natural resources.

Water RightsWater Rights are agreements about how countries can use water are agreements about how countries can use water in a region.in a region.

Water rights often cause political disputes.Water rights often cause political disputes. Israel, Jordan, and the Palestinians on the West Bank, all depend Israel, Jordan, and the Palestinians on the West Bank, all depend

on many of the same scarce water resources.on many of the same scarce water resources. Israel has the most power, so it has been most effective in Israel has the most power, so it has been most effective in

claiming water.claiming water. Much Israeli water is also cleaned after it is used once, and is Much Israeli water is also cleaned after it is used once, and is

then reused.then reused.

IrrigationIrrigation Many types of irrigation Many types of irrigation can be can be

found in Southwest found in Southwest Asia as Asia as farmers struggle to farmers struggle to bring water bring water to their fields to their fields from local rivers from local rivers and from and from underground underground aquifersaquifers (layers of (layers of underground rock where water runoff from rains and streams is underground rock where water runoff from rains and streams is trapped.) trapped.)

Some farmers use water from wells that tap into Some farmers use water from wells that tap into fossil water fossil water (water that has been underground for centuries). (water that has been underground for centuries).

Rains and steams do not replace this water, and once it is used, is Rains and steams do not replace this water, and once it is used, is gone forever.gone forever.

Farmers in very rural areas still use methods used by their ancestors to Farmers in very rural areas still use methods used by their ancestors to irrigate their fields, including water wheels, irrigation ditches and canals, irrigate their fields, including water wheels, irrigation ditches and canals, and animal power to lift water from underground wells. and animal power to lift water from underground wells.

Farmers in countries with more technology use modern irrigation Farmers in countries with more technology use modern irrigation techniques. techniques.

Israel and Saudi Arabia have developed systems of Israel and Saudi Arabia have developed systems of drip irrigation drip irrigation using using computers that measure out how much water each plant receives. computers that measure out how much water each plant receives.

There has also been a lot of work done to learn how to take water from the There has also been a lot of work done to learn how to take water from the ocean and desalinate it to use for drinking and irrigation. ocean and desalinate it to use for drinking and irrigation.

DesalinationDesalination (the process of removing salt and other chemicals from (the process of removing salt and other chemicals from seawater) is very expensive and seawater) is very expensive and requires requires complex technology.complex technology.

Water ProblemsWater Problems As countries in the Middle East have worked to modernize their systems of As countries in the Middle East have worked to modernize their systems of

agriculture, water pollution has been a growing problem. agriculture, water pollution has been a growing problem. Increased demand for irrigation to expand farming has led to overuse of Increased demand for irrigation to expand farming has led to overuse of

rivers and streams. rivers and streams. Many farmers have begun to use chemical fertilizers, which have Many farmers have begun to use chemical fertilizers, which have

contaminated water contaminated water supplies through supplies through runoff runoff into these same rivers into these same rivers

and streams. and streams. Constant planting and Constant planting and fertilizer fertilizer

use have led to use have led to the build-up the build-up of salt levels of salt levels in soils, eventually in soils, eventually

making it impossible to making it impossible to farm in those areas. farm in those areas.

In the rush to develop industry, many cities and towns have In the rush to develop industry, many cities and towns have grown rapidly, but the people living there have been slow to grown rapidly, but the people living there have been slow to create effective ways to manage garbage and treat sewage. create effective ways to manage garbage and treat sewage.

Access to water is also a source of conflict, especially Access to water is also a source of conflict, especially among countries that share a river system. among countries that share a river system.

Dams built along a river to create lakes for irrigation and the Dams built along a river to create lakes for irrigation and the production of production of hydroelectric power hydroelectric power (electricity produced (electricity produced from the energy of running water) in one country reduce the from the energy of running water) in one country reduce the amount of water available to other countries located further amount of water available to other countries located further downstream.downstream.

Oil in the Middle EastOil in the Middle East Two of the most important natural resources found in Southwest Two of the most important natural resources found in Southwest

Asia are natural gas and oil. Asia are natural gas and oil. These two resources bring wealth into the region because they are These two resources bring wealth into the region because they are

needed for much of the world’s economy. needed for much of the world’s economy. Over half of the world’s known oil reserves are found in this part Over half of the world’s known oil reserves are found in this part

of the world. of the world. This has made some This has made some of of

these countries these countries extremely rich and extremely rich and has led them to have has led them to have

a lot of control over the a lot of control over the global global economy.economy.

Many natural resources are in the ground and must be taken Many natural resources are in the ground and must be taken out.out.

The process of removing them is called The process of removing them is called extractionextraction.. Oil is the largest natural resource in Southwest Asia.Oil is the largest natural resource in Southwest Asia. Drilling oil from the ground requires heavy machinery that Drilling oil from the ground requires heavy machinery that

often endangers the environment.often endangers the environment. The process of The process of refiningrefining oil also creates pollution. oil also creates pollution. Refining oil means making oil from the ground ready to use Refining oil means making oil from the ground ready to use

in machines.in machines. Refining oil produces toxic chemicals.Refining oil produces toxic chemicals. This is an enormous problem for the environment.This is an enormous problem for the environment.

Who has the oil?Who has the oil? The Middle Eastern nations The Middle Eastern nations with the with the

greatest reserves of greatest reserves of natural gas and oil are natural gas and oil are Saudi Saudi Arabia, Iraq, Iran, and Kuwait. Arabia, Iraq, Iran, and Kuwait.

Some other countries have Some other countries have smaller reserves, smaller reserves, especially especially those found around the Persian those found around the Persian

Gulf. Gulf. These countries have enjoyed These countries have enjoyed tremendous tremendous

growth in national growth in national wealth and an improved wealth and an improved standard of living in the past fifty years. standard of living in the past fifty years.

Those countries without oil reserves have a much harder time improving Those countries without oil reserves have a much harder time improving living conditions for their populations. living conditions for their populations.

This difference in wealth in some of the Middle East has led to conflicts This difference in wealth in some of the Middle East has led to conflicts among the nations.among the nations.

FarmingFarming Many people in the Many people in the Middle East Middle East

practice practice subsistence agriculturesubsistence agriculture, , growing small growing small amounts of amounts of

crops, crops, to take care of to take care of their their local needs. local needs.

Because the climate Because the climate is so is so dry, agriculture nearly always depends on irrigation, directing dry, agriculture nearly always depends on irrigation, directing water from small rivers and streams to the farmers’ fields. water from small rivers and streams to the farmers’ fields.

There is some There is some commercial agriculturecommercial agriculture (growing crops for (growing crops for industrial markets), but even that is limited by lack of water.industrial markets), but even that is limited by lack of water.

Every society must deal with providing goods and services for its Every society must deal with providing goods and services for its peoplepeople

Each society must also develop an economic system that can decide Each society must also develop an economic system that can decide how to use the limited resources of that society as well.how to use the limited resources of that society as well.

Three basic questions must be answered:Three basic questions must be answered: 1) What goods and services will be produced?1) What goods and services will be produced? 2) How will goods and services be produced?2) How will goods and services be produced? 3) Who uses the goods and services that are produced?3) Who uses the goods and services that are produced?

In a In a traditional economytraditional economy, most of the economic decisions , most of the economic decisions are made based on custom and on the habit of how such are made based on custom and on the habit of how such decisions were made in the past.decisions were made in the past.

Goods and services are exchanged instead of using cash as a Goods and services are exchanged instead of using cash as a payment in a traditional economypayment in a traditional economy

This is known as This is known as barteringbartering As areas become more urbanized, however, bartering gives As areas become more urbanized, however, bartering gives

way to cash as payment.way to cash as payment. In the Middle East, traditional In the Middle East, traditional economies economies

can still be found in rural can still be found in rural areas of many areas of many countries in this regioncountries in this region

No country today can be described as No country today can be described as having a traditional economyhaving a traditional economy

A A command economycommand economy is one in which government planning groups make most of the economic decisions for the workers

This group decides which goods and services should be produces, as well as prices for the goods and wages paid to the workers

No individual could decided to start a new business The government decided what and where to produce the

goods. The government decides what jobs the workers do and

where the goods produced would be sold

The third basic type of economic system is a The third basic type of economic system is a market economymarket economy.. In a market economy, economic decisions are made by individuals In a market economy, economic decisions are made by individuals

who decide what to produce and what to buywho decide what to produce and what to buy Other names for a market economy are Other names for a market economy are capitalismcapitalism, , free enterprisefree enterprise, ,

or or laissez-fairelaissez-faire (French phrase that means to allow them to do as they (French phrase that means to allow them to do as they please)please)

Individuals who want to begin their own business may do so - they Individuals who want to begin their own business may do so - they take economic risk as they invest in their new businesstake economic risk as they invest in their new business

If new businesses are successful, the people who organized and If new businesses are successful, the people who organized and funded it will be successful and make a profitfunded it will be successful and make a profit

If the business fail, the investors will lose moneyIf the business fail, the investors will lose money

Today, no countries in the world have economic systems Today, no countries in the world have economic systems that are purely traditional, purely command, or purely that are purely traditional, purely command, or purely market systemsmarket systems

India is a good example of a India is a good example of a mixed economymixed economy in Asiain Asia The government makes some decisions about agriculture The government makes some decisions about agriculture

and industry, but free enterprise and entrepreneurship are and industry, but free enterprise and entrepreneurship are very common.very common.

Nearly all countries today have mixed economies – they Nearly all countries today have mixed economies – they have characteristics of a free market and free enterprise as have characteristics of a free market and free enterprise as well as some government planning and controlwell as some government planning and control

Not every country can produce all of the goods and services it needsBecause of this, countries specialize in producing those goods and services they can provide best and most efficientlyThey look for others who may need these goods and services so they can sell their productsThe money earned by such sales then allows the purchase of goods and services the first county is unable to produceIn international trade, no country can be completely self-sufficient (produce all the goods and services it needs)Specialization creates a way to build a profitable economy and to earn money to buy items that cannot be made locally

•Some countries in Southwest Asia are very rich in oil and natural gas, but they lack farmland and the ability to produce enough food•Saudi Arabia is able to specialize in the production of oil and natural gas and sell these products at great profit on the world market•The money earned in this trade can then be used to purchase food and the technology needed to make their agriculture system more efficient

•Israel has little in the way of oil wealth, but they have become leaders in agricultural technology even though they have a limited supply of land suitable for farming•They can sell this technology to earn the money to supplement their limited production of food

Israeli Desert cabbage

Trade barriers are anything that slows down or prevents one country from exchanging goods with anotherSome trade barriers are put in place to protect local industries from lower priced goods made in other countriesOther times trade barriers are created due to political problems between countriesTrade is stopped until the political issues are settledA tariff is a tax placed on goods when they are brought into (imported) from one country to another countryThe purpose of a tariff is usually to make the imported item more expensive than a similar item made locallyThis sort of a tariff is called a protective tariff because it protect local manufacturers from competition coming from cheaper goods made in other countries

A quota is a different way of limiting the amount of foreign goods that can come into a countryA quota sets s specific amount or number of a particular product that can be imported or acquired in a given period of timeA third type of trade barrier is called an embargoAn embargo is when one country announces that it will no longer trade with another country in order to isolate the country and cause problems with that country’s economyEmbargoes usually come about when two countries are having political disputesEmbargos often cause problems for all countries involvedThe US currently has embargos against Cuba, Iran, & North KoreaAn example is when OPEC launched an oil embargo in 1973 against nations that supported Israel in the Yom Kippur War

$Most of the countries in Asia have their own type of currency (money).$In order for them to pay for goods as they trade with each other, they have to establish a system of changing from one type of currency to another$This system is know as an exchange rate$They also have to be able to exchange their currencies with those used by other countries around the world

Human capital means the knowledge and skills that make it possible for workers to earn a living producing goods or servicesThe more skills and education workers have, the better they are able to work without mistakes and to

learn new jobs as technology changesCompanies that invest in better training and education for their workers generally earn more profitsGood companies also try to make sure working conditions are safe and efficient, so their workers can do their jobs without riskCompanies that have invested in human capital through training and education are most likely to have profitable businesses and more satisfied workers than companies that do not make these investmentsCountries where training and education are easily available often have higher production levels of goods and services, therefore higher gross domestic product, than countries that do not offer these opportunities

Israel has wide access to education and an economy that depends on technology industries to make up for the country’s lack of natural resourcesMany Israelis work in industries related to medical technology, agricultural technology, mining, and electronicsThey also have highly developed service industries (businesses that supply the needs of the rest of the working population)Israeli GDP is very high because they have invested heavily in their human capital

Saudi Arabia’s main industry is as an exporter of oil (petroleum)The technology involved in the oil industry is complicated and requires well-trained and educated labor forceSaudi Arabia also has enormous building projects which require investment in human capitalBy contrast, some Saudi citizens still practice traditional economic activities such as farming and herding animalsBecause oil is such an important part of the world’s economy, the Saudi GDP is high

Capital goods (the factories, machines, and technology that people use to make products to sell) are important to economic growth.Advanced technology and the organization of this technology into factories where many workers can work together increases production and makes the production more efficientProducing more goods for sale in a quicker and more efficient way leads to economic growth and greater profitThis greater profit leads to a higher GDPMiddle Eastern countries have invested heavily in Capital Goods in such areas as oil production,

communications, and the defense industry.

Distribution of natural resources throughout Asia plays a major part in determining the type of work people do and how comfortable they are able to liveA natural resource is something that is found in the environment that people needWater, trees, rich soil, minerals, and oil are all examples of natural resourcesOne of the most valuable resources in this part of the world is rich farmland

Literacy, or the ability to read and write, has a big effect on the standard of living of a countryThose who cannot read or write have a very difficult time finding decent jobsLack of education also prevents many young people from becoming the engineers, doctors, scientist, or entrepreneurs that modern economies need in order to bring improvements to their countriesIn many parts of the world, education is only available to those who can afford to pay for it themselvesIn those countries, the literacy rate is often quite lowCountries that have stronger economies usually make money available so that anyone who wants an education can go to school

One way to measure the standard of living is the Gross Domestic Product, or GDPThe GDP is the value of all goods and services produced within a country in a given year and converted into US dollars for comparisonWhen divided into a value per capita (or per person), it can be used as a measure of the living conditions in a countryThe higher the GDP value, the better the living conditions in the country

Part 4 - Middle East EconomicsPart 4 - Middle East Economics There are many different types of economic systems There are many different types of economic systems

in the Middle East. in the Middle East. Many countries have mixed economies with different Many countries have mixed economies with different

levels of government control. levels of government control. Some countries are less developed than others in the Some countries are less developed than others in the

region. region. Middle Eastern countries have thrived on producing Middle Eastern countries have thrived on producing

exports to other countries. exports to other countries. Cash crops have included grain, silk, and cotton.Cash crops have included grain, silk, and cotton. For the last sixty years, the region’s main export has For the last sixty years, the region’s main export has

been oil. been oil. The region imports much of its food and other The region imports much of its food and other

essential products.essential products.

OilOil Oil is one of the most important and valuable natural resources in the Middle Oil is one of the most important and valuable natural resources in the Middle

EastEast Oil and Natural gas are called fossil fuels, which mean they were created when Oil and Natural gas are called fossil fuels, which mean they were created when

plants and animals that lived centuries ago decayed undergroundplants and animals that lived centuries ago decayed underground Oil and natural gas are also considered non-renewable natural resources, Oil and natural gas are also considered non-renewable natural resources,

meaning they cannot be replaced once they are taken out of the groundmeaning they cannot be replaced once they are taken out of the ground Most of the world's industrial nations depend on a steady supply of oil and Most of the world's industrial nations depend on a steady supply of oil and

natural gasnatural gas The US has to import nearly half of all the oil it uses, almost 18 million barrels The US has to import nearly half of all the oil it uses, almost 18 million barrels

every dayevery day Many countries of the Middle East have become very rich over the past 50 years Many countries of the Middle East have become very rich over the past 50 years

as the world demand for oil and gas has increasedas the world demand for oil and gas has increased Over half of the world’s known oil reserves come from the Middle EastOver half of the world’s known oil reserves come from the Middle East

IsraelIsrael

Israel has a mixed economy that is also technologically Israel has a mixed economy that is also technologically advanced. advanced.

The Israeli government and private Israeli companies own and The Israeli government and private Israeli companies own and control the economy. control the economy.

Israel does not have many natural resources.Israel does not have many natural resources. Israel has to import grain, oil, military technologies, and many Israel has to import grain, oil, military technologies, and many

other goods. other goods. The country is a producer of high-tech equipment, electronics, The country is a producer of high-tech equipment, electronics,

biomedical industries, and cut diamonds. biomedical industries, and cut diamonds. The service industry accounts for much of Israel’s economy – The service industry accounts for much of Israel’s economy –

areas such as insurance, banking, retail, and tourism account areas such as insurance, banking, retail, and tourism account for over half of it. for over half of it.

Israel relies heavily on US economic and military aid.Israel relies heavily on US economic and military aid.

Saudi ArabiaSaudi Arabia Saudi Arabia also has a mixed Saudi Arabia also has a mixed economy economy

but leans toward but leans toward government control.. government control.. Saudi Arabia’s main export is oil. Saudi Arabia’s main export is oil. The oil industry has made the The oil industry has made the Saudi Saudi

royal family quite wealthy. royal family quite wealthy. In fact, several members of the In fact, several members of the

royal family are among the royal family are among the wealthiest people wealthiest people in the world. in the world.

Oil accounts for well over half if Oil accounts for well over half if the country’s economy. the country’s economy.

Oil funds the country’s Oil funds the country’s education, defense, education, defense, transportation, health, transportation, health,

and housing. and housing. The government is trying to encourage more private businesses to boost the The government is trying to encourage more private businesses to boost the

economy and decrease the countries dependence on oil.economy and decrease the countries dependence on oil.

IranIran Iran has great oil wealth, like Saudi Arabia, though there is Iran has great oil wealth, like Saudi Arabia, though there is

also a more mixed economy that has grown in spite of also a more mixed economy that has grown in spite of government attempts to keep tighter controlgovernment attempts to keep tighter control

Iran’s command economy Iran’s command economy has not been very efficient has not been very efficient in recent years in recent years

Even though there is oil Even though there is oil wealth, wealth, many Iranians do many Iranians do not share in not share in the money as the money as much of it goes much of it goes toward the toward the military military

TurkeyTurkey The government of Turkey controls The government of Turkey controls the the

country’s economy. country’s economy. Turkey’s economy, however, is not Turkey’s economy, however, is not entirely a entirely a

command economy. command economy. A large part of the country’s economy A large part of the country’s economy

is based on farming. is based on farming. The Turkish government has had many The Turkish government has had many disputes with other countries over its usedisputes with other countries over its use of natural resources, such as the Euphrates of natural resources, such as the Euphrates

River. River. Clothing and textiles are the countries major industries. Clothing and textiles are the countries major industries. The service industry makes up about The service industry makes up about

half of Turkey’s economy, as it half of Turkey’s economy, as it does Israel's economy. does Israel's economy.

Economic GrowthEconomic GrowthIsraelIsrael

Economic growth has been difficultEconomic growth has been difficultto achieve for many Middle to achieve for many Middle Eastern Eastern countries. countries.

War is a major threat to the region’s War is a major threat to the region’s economies.economies.

For example, both war and a large number of immigrants present For example, both war and a large number of immigrants present challenges to the Israeli economy. challenges to the Israeli economy.

The Israeli government has taken control of certain economic The Israeli government has taken control of certain economic activities in order to address these problems. activities in order to address these problems.

The Israeli government controls most activities related to The Israeli government controls most activities related to agriculture. agriculture.

This helps the nation’s economy because the county’s natural This helps the nation’s economy because the county’s natural resources are so limited.resources are so limited.

Saudi ArabiaSaudi Arabia Some gulf countries invest Some gulf countries invest money to money to

make their economies more diverse. make their economies more diverse. In the last few decades, Saudi In the last few decades, Saudi

Arabia has begun Arabia has begun encouraging the development of industries encouraging the development of industries other than oil in order to other than oil in order to make its economy make its economy stronger.stronger.

In 1976, the Saudi government crated the Saudi Basic Industries In 1976, the Saudi government crated the Saudi Basic Industries Corporation. Corporation.

The SBIC invests in capital goods. The SBIC invests in capital goods. These capital goods have made the country a steady producer of steel, These capital goods have made the country a steady producer of steel,

industrial gasses, plastics, and petrochemicals.industrial gasses, plastics, and petrochemicals.

IranIran Wars can also influence a country’s economy by influencing what the Wars can also influence a country’s economy by influencing what the

country decides to produce.country decides to produce. Iran’s war with Iraq led Iran to put more money into its military Iran’s war with Iraq led Iran to put more money into its military

industries. industries. The number of people without jobs is Iran is high. The number of people without jobs is Iran is high. The country provides less protection for its human capital than other The country provides less protection for its human capital than other

countries do. countries do. For example, Iran does For example, Iran does

not have private not have private labor unions to labor unions to protect protect workers.workers.

It is a mixed economy It is a mixed economy on the side of on the side of

government government control of control of oil and oil and major industries.major industries.

OPECOPEC In the 1960s, several of these In the 1960s, several of these Southwest Southwest

Asian countries joined Asian countries joined with with other oil-rich countries other oil-rich countries around the around the world to create the world to create the Organization of Organization of Petroleum Exporting Countries (OPEC)Petroleum Exporting Countries (OPEC) in order to have more control in order to have more control over the price of oil on the world market. over the price of oil on the world market.

OPEC has called for an embargo, or a slow-down or temporary halt, OPEC has called for an embargo, or a slow-down or temporary halt, to oil supplies at different times in the past to get political and to oil supplies at different times in the past to get political and economic agreements from the other countries in the world. economic agreements from the other countries in the world.

While some countries in the Middle East have grown very rich due to While some countries in the Middle East have grown very rich due to their oil production, others have struggled to help their populations their oil production, others have struggled to help their populations make a decent living.make a decent living.

The 1973 Oil CrisisThe 1973 Oil Crisis Some trade barriers are political. Some trade barriers are political. Sometimes governments limit trade with other countries because Sometimes governments limit trade with other countries because

they disagree with the actions or policies of those countries. they disagree with the actions or policies of those countries. This is a trade barrier designed to purposefully hurt the economy This is a trade barrier designed to purposefully hurt the economy

of another country. of another country. The The 1973 oil crisis1973 oil crisis is one example of such a trade barrier. is one example of such a trade barrier. The 1973 oil crises began on October 17, 1973. The 1973 oil crises began on October 17, 1973. OPEC announced that its member nations would no longer ship OPEC announced that its member nations would no longer ship

oil to countries that had aided Israel in its recent war with Egypt. oil to countries that had aided Israel in its recent war with Egypt. Those countries included the US and many in Europe.Those countries included the US and many in Europe. OPEC raised the price of oil 70%. OPEC raised the price of oil 70%. As a result, the price of gasoline in the US quadrupled over As a result, the price of gasoline in the US quadrupled over

several months.several months.

These actions had a large impact on industrialized nations These actions had a large impact on industrialized nations because of their growing dependence on oil and gas. because of their growing dependence on oil and gas.

Western countries had been used to cheap and plentiful oil Western countries had been used to cheap and plentiful oil resources before the crisis. resources before the crisis.

Oil consumption had doubled in the US. Oil consumption had doubled in the US. At the time, the US was using about 1/3At the time, the US was using about 1/3rdrd of the world’s of the world’s

energy. energy. The crisis caused the value of the US dollar to drop. The crisis caused the value of the US dollar to drop. It also had a widespread negative impact on It also had a widespread negative impact on

the world economy. the world economy. OPEC started shipping oil to Western OPEC started shipping oil to Western nations nations

again in 1974.again in 1974. Western economies began to get stronger again. Western economies began to get stronger again.