Unit 14: Economic Understanding

1. Unit 14: Economic Understanding Economic Basics for Georgia

2. Goods & Services Produced in GA • All throughout its history, GA has produced goods & services consumed at home and abroad • GA’s productive soils and natural resources have allowed for a thriving economy. • Since 1865, economy diversified to include manufacturing • Since 1960, developed a strong service component in its economy in areas such as banking, finance, insurance, medical care, & education

3. Colonial Georgia • Grape production & growing mulberry trees were not suitable to GA’s soils • Colonists developed different cash crops (crops grown for sale, not consumption) • Farmers began to grow • Rice • Wheat • Indigo • Vast forests allowed for production of wood related products such as tar, turpentine & pitch

4. Economy in Post-Revolutionary GA • Cotton production began in 1786 • Invention of the cotton gin caused cotton to become GA’s #1 cash crop before the Civil War

5. New South: Post Civil War Economy in GA • Late 1800’s saw the introduction of manufacturing & business to GA’s economy • Textile industry developed to produce cotton cloth; GA had cotton, abundant land/water, cheap labor • Businesses grew to support manufacturing • Forests were used to produce lumber for new factories, mills, housing, furniture, naval stores (materials used in ship building), pulp & paper • Largest percentage of the economy was still mainly agricultural

6. Mineral Resources • New South era also rise in use of mineral resources • 2 major minerals were mined (still vital to state economy today) • Kaolin: white clay used in manufacture of paper & other products • Bauxite: used in the manufacture of aluminum • Other important minerals: gold, coal & iron

7. 20th Century GA: Economic Diversity Continues • To meet demands of the war effort in WWI & WWII, new industry was developed in GA • Cars & trucks • Airplanes • Shipyards expanded & updated • Post WWII era saw complete industrial development of GA & agriculture became a secondary source of state revenues/employment

8. GA’s Economy Today • Agriculture: GA is a leading producer of peanuts & poultry • Variety of manufactured goods – food, beverages, carpet, aircraft & aircraft parts • Largest sector of economy is service sector (something that is performed for people rather than producing a product): • Medical care, banking, insurance, finance, education

9. GA & International Trade • 1/6 of GA’s farm products are exported • More than 50 consulates, trade offices & bi-national chambers of commerce in GA • Foreign companies operating in GA: Germany, Japan (employs the most Georgians), the UK, France, Canada, the Netherlands; generate more than $15.5 billion in capital investment • Foreign investors like GA because its close to markets, suppliers & key industries, has ample transportation, good living conditions, mild climate, strong growth, and good quality, moderately priced labor market.

10. GA’s Transportation Systems & World Trade International trade continues to rise due • 2 deepwater ports • Hartsfield-Jackson International Airport plus over 260 local/regional airports • 4 major interstates • Over 5,000 miles of rail service lines • 1000’s of miles of federal & state hwy systems

11. Important Economic Terms to Know • Economy – the system of growing, making, selling, buying, & using products & services • Market Economy – the US has a market economy in which producers & consumers determine what products are produced & what prices are paid for those products • Trade – voluntary exchange of goods & services between people & nations • Bartering - trading goods & services without money • Mercantilism – British economic policy to use the raw materials/resources of the colonies to enrich Britain • Import – a product brought into a country to sell • Export – a product a country sells to another country • Entrepreneurs – those people in a market economy who see a need & create goods & services to satisfy the need. They are risk takers, innovators, & creative • Profit – the amount left over after all production costs have been subtracted.