SS7E5 The student will analyze different economic systems

E5a Compare how traditional, command, and market economies answer the economic questions of 1) what to produce, 2) how to produce and 3) for whom to produce.

Traditional Economy

•Most economic decisions based on custom and habit (as things were done in the past)

•Many found in rural areas

•People depend on members of extended family

•Work is often farming, herding animals, simple crafts or trades

•Very little money changes hands

•Bartering and trading goods and services replaces money

•No SW Asia country has a primarily traditional economy

Command Economy

•More centralized economy

•Government planning groups make most of the basic economic decisions for the workers

•Decides which goods and services will be produced

•Decides on prices of goods and wages for workers

•No individual can start new business on their own

•Government decides what to make, who owns the place where goods are made, what jobs the workers will do and how and where the goods produced will be sold

Market Economy

•A society’s economic decisions are made by individuals who decide what to produce and what to buy

•Also called capitalism, free enterprise, or laissez-faire

•Many countries in Southwest Asia use a market economy

E5b Explain how most countries have a mixed economy located on a continuum between pure market and pure command

Mixed

•Nearly all modern countries have a mixed economy (some market and some command)

•Generally a combination of market and command

•Traditional economies are hard to find and cannot function effectively for a whole nation

E5c Compare and contrast the economic systems of Israel, Saudi Arabia, Turkey and Iran

Israel

•Relatively small area

•Almost no natural resources

•Economy based on advanced technology which allows them to make up for what they lack in farmland and natural resources

Saudi Arabia

•Located on the Arabian Peninsula, it’s one of the largest countries in SW Asia

•Much is desert with rich oil reserves

•Can buy whatever they can’t produce

•King and advisors make most decisions about how and where to use oil profits

•Have invested much in technologies to produce goods they would not be able to do otherwise in a desert climate.

Iran

•Has great oil wealth

•A more mixed economy than Saudi Arabia in spite of government attempts to maintain control

•Iran’s command economy hasn’t been very efficient in recent years

•Many Iranians do not share in the oil wealth

Turkey

•Located in the northwestern part of the M. E.

•Istanbul – gateway between Europe and Asia

•Turkey has been part of ancient trade routes for thousands of years

•Least economic freedom

•Airlines, railroads, telephone and television controlled by government

•Government has been loosening their hold

•More private ownership has been allowed

•More laws enacted to protect business owners