Chapter 18: Comparative Market Structures

1. Chapter 18: Comparative Market Structures

2. Throughout the 20th century, developed countries fell into three main categories: • Capitalism • Socialism • Communism

3. Capitalism ADVANTAGES DISADVANTAGES Can’t satisfy everyone Not as many public goods Based on demand – may ignore the poor • Efficient • Freedom • Decentralized • Consumer satisfaction

4. Socialism ADVANTAGES DISADVANTAGES Less efficient as capitalism If workers have a government guarantee of a job, hard work may be scarce High taxes • People use the election process to influence the WHAT, HOW, and FOR WHOM questions… Politicians provide many basic needs

5. Communism ADVANTAGES DISADVANTAGES Central authority sets prices State owns the factors of production Lacks effiency • Everyone is on an equal socioeconomic field

6. Transition to Capitalism • When the Cold War ended, communist nations had many difficulties • Privatization – making government owned businesses into privately owned businesses • Governments had difficulty letting go of power

7. Rise and Fall of Communism • 1917 – Lenin overthrew the Russian czarist government and established communism • Stalin established collectivism – the forced common ownership of farms, factories, and trading

8. Transitioning from Communism to Capitalism • Russia & other eastern European countries have had different success stories • Most struggled to establish the privatization of their businesses • Some countries sold vouchers, some sold the businesses to foreign investors

9. The Black Market:when goods are sold illegally • Eastern European countries established black markets during the transition to privatization

11. Word Bank • NAFTA • Infant Industry • Collectivism • Import • Protectionist • Socialism • WTO • Solidarity • Black Market • Quota • Export • Tariff • Trade Deficit • Capitalism • Privatization • Free Trader • Foreign Exchange • Communism • Trade Surplus • Collateral

12. Chapter 19 Developing Countries Section 1

13. Economic Development • 1.2 Billion people worldwide live off of earning $1 per day • A shortage of natural resources, limited education & technology, and corruption slow poor countries from developing

14. Most Wealthy Countries

15. TURN TO PAGE 523 IN YOUR TEXTBOOK 

16. Obstacles to Development • POPULATION GROWTH: • Developing countries have a high crude birthrate – number of live births per 1,000 people • Increased life expectancy • Some people feel that societies should work for zero population growth

17. More Obstacles to Development 2. Limited natural resources 3. Lack of appropriate education and technology 4. Religion 5. Debt 6. Corruption

18. Helping with Development • IMF (International Monetary Fund) – gives economic advice to developing countries; loans currency • World Bank – an international corporation that makes loans and gives financial assistance to developing countries

19. The World Bank (cont.) • Advises countries to reduce trade barriers • Also recommends that these countries invest in their people • Help them help themselves

20. Section 2 & 3: Financing Economic Development

21. Stages of Economic Development 1. Primitive Equilibrium – no formal economic organization 2. Transition 3. Takeoff 4. Semi-development 5. High Development

22. The European Union • No regulation for the flow of workers • Citizens hold a common passport • The Euro was first produced in 2002

23. OPEC • Cartel – a group of producers or sellers who agree to limit production of a product to control prices • Organization of Petroleum Exporting Countries • Cartel on Oil

24. South Korea • Example of a developing country that became successful • 11th largest economy in the world