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The Four Factors that Influence Economic Growth
• Capital Goods
• Human Capital
• Natural Resources - Oil
• Entrepreneurship
What is???
• Capital Goods – Resources such as factories, machinery, and tools that people use to make other goods.
• More and better capital goods enable workers to make products more quickly and more cheaply.
What is???
• Human Capital – The knowledge and skills that allow workers to produce goods and services and earn an income.
• Examples: education, training, workers
What happens to a country’s GDP when they invest in capital
goods and human capital?
02468
10121416
No/Low Investment in Capital Goods
High Investment in Capital Goods
No/Low Investment in Human Capital
High Investment in Human Capital
Why?• When there are more capital goods, workers
become more efficient and productive. When more goods are produced the economy grows.
• Education and training helps workers learn new skills as jobs change. People who invest in their human capital by increasing their knowledge and skills earn more money. Especially when it comes to jobs in the technology field.
Israel
• One of the most advanced countries in Southwest Asia in economic and industrial development
• Ranks 3rd in the world in the number of citizens who hold university degrees
• Development of cutting-edge technologies in software, communications and the life sciences
Saudi Arabia
• Economy is petroleum-based• Over 25% of annual budget is for
education.• The system provides students with free
education, books and health services to every Saudi.
• The educational system provides quality instruction in diverse fields of modern and traditional arts and sciences
Iran• Leading manufacturer in the fields of
transportations, construction materials, home appliances, food and agricultural goods, information technology, power and petrochemicals.
• Economic inefficiency and insufficient investment have prompted an increasing number of educated Iranians to seek employment overseas.
• Only 5% of GDP is spent on education.
Israel
Oil does not play a major role in economy. Their economic growth is based on a combination of cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables).
Saudi Arabia
Oil makes up 80% of the country’s exports and comprises about 45% of Saudi Arabia's gross domestic product. They are the largest exporter of petroleum in the world and officially has about 260 billion barrels of oil reserves.
Iran Oil makes up 85% of the governments
revenues. High oil prices in recent years have helped Iran to earn nearly $70 billion in foreign exchange reserves. Iran is OPEC’s (Organization of Petroleum Exporting Countries) second-largest exporter after Saudi Arabia, and is the fourth-largest exporter of crude oil.
What is the role of entrepreneurs?
• Israel: The second-largest number of start-up companies in the world (after the United States) and is a free market economy.
• Saudi Arabia: Entrepreneurs are not a huge factor in the growth of the economy. Most private-owned companies are supported by generous government financing and incentive programs.
• Iran: Entrepreneurs do not play a big role in the economy. There are some small-scale private trading companies, workshops, and farming businesses.
DefinitionLiteracy Rate:
The number of people over the age of 15 that can read and write.
Standard of Living:
Quality of life based on the amount of goods and services available to people. People who have a high standard of living have enough food and housing, good transportation and communications, and access to schools and health care. They also have a high literacy rate.
Literacy Rates & Standards of Living
• Israel: 97.1% literacy rate; standard of living is good but a lot of people still live in poverty.
• Saudi Arabia: 78.8% literacy rate; medium standard of living; plagued by high unemployment rates due to a high amount of unskilled workers.
• Iran: 77% literacy rate; high unemployment rates, low standard of living
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