Trade and Economic Growth SW Asia Unit 3. Voluntary Trade Factors involved in Voluntary Trade 1. Specialization 2. Trade Barriers 3. Currency Exchange.

Trade and Economic Growth

SW Asia Unit 3

Voluntary Trade

Factors involved in Voluntary Trade1. Specialization2. Trade Barriers3. Currency Exchange4. Control of Supply

SpecializationDefine:-specialization: The products a country makes best and

are demand in the world market.

-interdependence: A relationship between countries in

which they rely on one another for resources, goods, or services.

Specialization Think- Pair-Share

Example:

Specialization

EQ: How does specialization encourage trade between countries?

If a country produces the goods they can make most efficiently, that country can trade them for goods made by others that cannot be produced locally.

Trade Barriers

Definition:The prevention of free trade

Trade Barriers

Physical Trade Barriers: (give 2 examples)

-mountains-deserts-lack of rivers, bodies of water

Trade BarriersPolitical Trade Barriers:-tariffA tax placed on goods when they are brought

(imported) into one country from another country.

 -quotaA limit to the number of amount of a foreign-

produced goods that is allowed into a country.

-embargoA formal halt to trade with a particular country

for economic or political reasons.

System for Exchanging Currency

Define:-currency:Paper or coins that a country uses for its

money supply. -international trade:Countries trading with each other to

obtain resources, goods, and services. -exchange rate:A system of changing one type of

currency to another.

System for Exchanging Currency

Why does international trade require a system for exchanging currency between countries?

So that it is possible to buy and sell goods between nations with different types of money.

OPEC

Organization ofPetroleumExportingCountries

OPEC

Define-supply: The amount of a good or service

available for sale in a market.-demand: The amount of a good or service

wanted in a market.

OPEC

What is the primary function of OPEC?

To control the supply and price of oil.

OPEC

Give some examples of what petroleum (oil) is used for:

carslawn mowersmachineryto make plastic products

Economic Growth

4 Factors that influence Economic Growth

1. Labor2. Capital Goods3. Land(resources)4. Entrepreneurship

Relationship between human capital and GDP

Define:-GDP:

Gross Domestic Product

The value of all goods and services produced within a country in a given year and converted into US dollars for comparison.

Relationship between human capital and GDP

 -human capitalThe knowledge and skills that make it possible for workers to earn a living producing goods or services.

Relationship between human capital and GDP

Companies that invest in human capital are more_____________________. 

Countries that invest in human capital have ______________________GDP’s because_______________________

profitable

higherthey invest in educating and training their citizens.

Relationship between human capital and GDP

Think- Pair-Share

Example:

Relationship between capital goods and GDP

Define:-capital goodsThe factories, machines, and

technology that people use to make products to sell.

3 examples of capital goods:- oil producing technology- communications equipment - assembly line machinery

Relationship between capital goods and GDP

Companies that invest in capital goods are more__________.

Countries that invest in capital goods have _________________ GDP’s because_________________________

profitable

higher they can produce more goods in a quicker and efficient way.

Relationship between capital goods and GDP

Think-Pair-ShareExample:

The Role of Oil in SW Asia Economy

Another name for oil is_____________.petroleum

The Role of Oil in SW Asia Economy

Countries WITH oil in SW Asia tend to have:

Countries WITHOUT oil (except Israel) tend to have:

•Higher GDP•Higher standard of living

•Lower GDP•Lower standard of living

The Role of Oil in SW Asia Economy

Israel has very little _____. However, Israel has a ____________________because they invested in ________

and ___________ goods for ___________and _______________ industries.

oilhigh GDP

humancapital technologycommunication

Entrepreneurship

Define:-entrepreneurCreative, original thinkers who are

willing to take risks to create new businesses and products.

Entrepreneurship

An entrepreneur is willing to take a_____

in order to make a________________.

risk

profit

Entrepreneurship Think-Pair-Share

Example

Answer EQ’s

Paragraph form- use all of the vocabulary that are in your graphic organizers:

1. What factors encourage economic growth?

2. What factors encourage trade between countries?