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Economies Around the World
Just as governments can be classified into different kinds….
• …the economies of the world can also be classified, based on industries.
Industry
• An industry is all the businesses that make one kind of product or provide one kind of service.
Examples: • Energy/Power Industry• Health Care Industry• Agriculture Industry
4 Main Kinds of Industries
1. Primary2. Secondary3. Tertiary4. Quaternary
Primary Industry
• A primary industry provides natural resources.
• What is a natural resource?
Primary Industry
Examples:• Farming• Fishing• Logging• Mining
1 Primary Industry 1• Brings natural resources to market.
• Usually the natural resources are the raw materials that a secondary industry uses to make goods.
2 Secondary Industry 2• …turns a natural resource into a finished
product.
Examples:• Clothing factories use raw wool or cotton to
make clothing. • Refineries turn petroleum into gasoline.• Mills turn iron ore into steel.
3 Tertiary Industry 3
• …sells and transports to market the natural
resources of _______________and the finished
products of ____________________.
Tertiary Industry
• Stores and trucking companies are examples of businesses in a tertiary industry.
• Tertiary industries provide not only goods but also services.
Tertiary Industry
Examples of services:• Banking• Education• Health care
4 Quaternary Industry 4• …involves research, information gathering, or business management.
Examples:• Scientists• Accountants• Architects• Lawyers• Engineers
Wait a minute…
• Don’t scientists, lawyers, architects, accountants, and engineers provide a service too?
Yes!
• Since they provide a service and information gathering, they are considered a part of the tertiary industry and quaternary industry.
Review
• What industry is a nurse in?
• Tertiary
Review
• What industry is the shipping business?
• Tertiary
Review
• What industry is farming in?
• Primary
Review
• What industry is an accountant in?
• Tertiary and Quaternary
Review
• What industry is a clothing manufacturer in?
• Secondary
“Developed or Developing?”
• The kinds of industries in a country can often determine whether the country is developed or developing.
• Countries that have well-established economies, generally with all four kinds of industries are called developed countries.
Developing Countries
• Countries whose economics are still being built are called developing countries.
• They generally have fewer kinds of industries.
GDP
• Developed countries have more kinds of industries, they produce more goods and services than developing one do.
• One measure of the total value of goods and services a country produces is its GDP, or gross domestic product.
GDP
• The GDP of developed countries is higher than the GDP of developing ones.
• Developed countries with a high GDP include the United States, whose GDP is more than 9 trillion dollars.
• The Caribbean country of Dominica, which is developing, has a GDP of just about 225 million dollars.
• The US GDP is 40,000 times larger than Dominica.
• http://www.google.com/imgres?hl=en&sa=X&tbo=d&rlz=1G1GGLQ_ENUS251&biw=1366&bih=649&tbm=isch&tbnid=ih1D1XGXG0KiHM:&imgrefurl=http://www.econguru.com/2007-gdp-nominal-per-capita-world-map-imf/&docid=M9VxBh1rVIoKMM&imgurl=http://www.econguru.com/wp-content/uploads/2008/10/gdp_nominal_per_capita_world_map_imf_2007.PNG&w=1350&h=625&ei=lrSfUPuAD8Xg2QW_lIGgDQ&zoom=1&iact=hc&vpx=176&vpy=209&dur=456&hovh=153&hovw=330&tx=207&ty=68&sig=106373214429270444058&page=1&tbnh=130&tbnw=280&start=0&ndsp=18&ved=1t:429,r:1,s:0,i:157
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Measure of a country’s economy
• 1. GDP: Gross Domestic Product
• 2. Standard of Living – how well its people live
Standard of Living
• How well a country’s people live. The standard of living can be indicated by the average person’s income and purchasing power, or spending.
• How much money do you have left after spending for basic needs?
Review
• How are economies around the world measured?
• By the country’s GDP and by the standard of living of the people.
Economic Systems
• Each country has an economic system or a way to make decisions about how to use its resources. (Examples: fish, trees, oil, coal, etc.)
Three Main Kinds of Economic Systems in the world today:
1. Traditional economy – shows little change over the years. People do the same kinds of work as people did in earlier times.
Traditional Economy
• Economic decisions are based on custom or habit.
• What have they always done?
• Most people in a traditional economy practice subsistence farming, raising only enough food for themselves and their families.
Subsistence farming
• If you only have enough food to feed yourself and your family, do you have enough to sell for money?
• Do you have money to buy new tools to improve your way of farming?
Subsistence Farming
• Since there is only enough food for survival, they must work as they always have.
• Traditional economies are found in many developing countries in Africa, Asia, and South America.
Three Main Kinds of Economic Systems in the world today:
2. Command Economy – the government or some central authority makes most of the economic decisions.
• Controls both farms and factories. • People and businesses are not free to make
their own decisions.
Command Economy
• The government determines what and how much will be produced.
• The government also decides how much the workers will earn and how much the goods and services will cost.
Command Economy
• This economic system, command economy, often leads to less than enough or too much of different products.
• The island country of Cuba in the Caribbean has one of the few remaining command economies in the world.
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Three Main Kinds of Economic Systems in the world today:
3. Market Economy – the people own and control businesses.
• The people make their own choices about which goods and services they will buy or produce.
• The people decide how they will spend their money and what kind of work they will do.
Market Economy
• This freedom of individuals and businesses in a market economy is often called free enterprise.
• Many countries in the world with democratic governments, including the US, have market economies.
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Canada
• Some democracies, like Canada, have a mix of market economy and command economy.
• Canada’s government has control over many parts of the country’s economy.
• Canada’s government controls major industries, such as broadcasting and health care.
Review
• How do democracies and market economies affect how people live?
• How do democracies and market economies affect how people live?
• Answer: People can choose their leaders and make decisions about how to spend their money.
Question 2
• How would your life be different if the government chose which products you could buy?
Answer
• How would your life be different if the government chose which products you could buy?
• Answer: Some items might not be available.
Question 3
• What is the difference between the economy of a developed country and the economy of a developing country?
Answer
• What is the difference between the economy of a developed country and the economy of a developing country?
• Developed countries (like the US) have a variety of industries.
• Developing countries have fewer industries.
Question 4
• What are the four kinds of industries? Give an example of each?
Answer
• Primary - farming• Secondary – clothing manufacturing• Tertiary- selling or transporting goods/services• Quaternary – scientist, architect
Question 5
• What kind of economy is usually found in democratic countries?
Answer
• What kind of economy is usually found in democratic countries?
• Answer: Market Economy
Question
• What are some benefits of free enterprise that are not found in a command economy?
Answer
• What are some benefits of free enterprise that are not found in a command economy?
• Answer: There are a greater variety of goods available to choose from.
Kinds of economy