Jocelyne, Heather, Lelia, Lizzie, JenniferJocelyne, Heather, Lelia, Lizzie, Jennifer

A.P. GovernmentA.P. Government

Teacher: Mr. SalianiTeacher: Mr. Saliani

Historical EconomyHistorical Economy

IranIran No collective farmsNo collective farms

Major exporter of oil Major exporter of oil (rentier state)(rentier state)

Rely on imports for foodRely on imports for food Income gap of upper Income gap of upper

and lower class (duel and lower class (duel society)society)

ChinaChina Peoples Communies Peoples Communies

(collective farms)(collective farms) Major exporter of Major exporter of

textiles and toystextiles and toys Rely on imports for Rely on imports for

foodfood Income gap of urban Income gap of urban

and rural workersand rural workers

China - Economic TermsChina - Economic Terms

Household Responsibility System-Families Household Responsibility System-Families can control the production of the farmland can control the production of the farmland and have contracts that last for 30 years or and have contracts that last for 30 years or moremore

Township and Village Enterprises (TVEs) -Township and Village Enterprises (TVEs) -Rural factories and businesses owned/ run Rural factories and businesses owned/ run by the local government and private by the local government and private businessmen (in practice, TVE’s run like businessmen (in practice, TVE’s run like privatized factories)privatized factories)

SimilaritiesSimilarities

Both countries make most of their profits off Both countries make most of their profits off of the goods they export (known in Iran as of the goods they export (known in Iran as rentier state)rentier state)

Both countries rely on foreign tradeBoth countries rely on foreign trade Both countries have a lack of equal wealth Both countries have a lack of equal wealth

distributiondistribution

DifferenceDifference Iran has economic and Iran has economic and

social problems due to social problems due to their rapid increase in their rapid increase in population. China population. China doesn’t have this doesn’t have this problem because of its problem because of its “One Child Policy”“One Child Policy”

Iran’s Fertility Rate – Use of Iran’s Fertility Rate – Use of ContraceptionContraception

Birth Rates in ChinaBirth Rates in China

China in the Global China in the Global EconomyEconomy

Value of Iran’s Foreign TradeValue of Iran’s Foreign Trade 20032003 Foreign Trade Hit 62.6 Foreign Trade Hit 62.6

billion dollarsbillion dollars Exports - 35.3 billion dollarsExports - 35.3 billion dollars Imports - 27.3 billion dollarsImports - 27.3 billion dollars Exports are focused on Exports are focused on

Asia, and EuropeAsia, and Europe Exporter of Oil, and other Exporter of Oil, and other

goods (i.e. cars)goods (i.e. cars)

20022002 China’s foreign tradeChina’s foreign trade More than $620 billionMore than $620 billion PRC -> 6th largest PRC -> 6th largest

trading nation in the trading nation in the world.world.

Manufacturers of 60% Manufacturers of 60% of the world’s bikesof the world’s bikes

Importer of oilImporter of oil Trade is based in East Trade is based in East

Asia & Globally.Asia & Globally.

ChinaChina IranIran

Connection w/ the Connection w/ the U.S./WorldU.S./World DailyDaily

Production - 4.2 million barrels of oil Production - 4.2 million barrels of oil About 5 % of daily world About 5 % of daily world

production.production. Exports 2.7 million barrels Exports 2.7 million barrels

(principally to Japan, China, South (principally to Japan, China, South Korea, Taiwan and Europe.)Korea, Taiwan and Europe.)

The U.S. does not import oil from The U.S. does not import oil from Iran although other nations are very Iran although other nations are very reliant upon it, so if prices increase reliant upon it, so if prices increase the overall demand will increase, the overall demand will increase, and therefore increase the price of and therefore increase the price of oil in the U.S.oil in the U.S.

U.S. is the biggest U.S. is the biggest market for Chinese market for Chinese exports (20+ of the total exports (20+ of the total exports)exports)

U.S. has a huge trade U.S. has a huge trade deficit with China -> deficit with China -> Dependency on Dependency on Chinese productsChinese products

ChinaChina IranIran

Foreign InvestmentForeign Investment 2006 - Foreign Direct 2006 - Foreign Direct

Investment hits $7b Investment hits $7b 1993 - Establishment of 1993 - Establishment of

Free Trade-Industrial Zones Free Trade-Industrial Zones in the Islamic Republic of in the Islamic Republic of Iran.Iran.

Only private individuals, Only private individuals, companies and companies and establishments of foreign establishments of foreign origin are allowed to invest origin are allowed to invest in Iran. in Iran.

1978 - Close to Zero -> 2001 – over 1978 - Close to Zero -> 2001 – over $700 billion$700 billion

Investors include, Coca-Cola, Investors include, Coca-Cola, Motorola, & G.M.Motorola, & G.M.

World’s largest receiver of direct World’s largest receiver of direct foreign investmentforeign investment

Special Economic Zones (SEZ’s) Special Economic Zones (SEZ’s) Places set aside by the government to Places set aside by the government to attract overseas investors through attract overseas investors through incentives (tax breaks, modern incentives (tax breaks, modern infrastructure less “red tape” etc…)infrastructure less “red tape” etc…)

They are places of high growth as well They are places of high growth as well as corruption and crime.as corruption and crime.

The largest SEZ is Shenzhen near The largest SEZ is Shenzhen near Hong Kong 20 yrs, 70,000 pop. - > 70 Hong Kong 20 yrs, 70,000 pop. - > 70 millionmillion

ChinaChina IranIran

Reform and Reform and Globalization of Globalization of

EconomyEconomy

Reform and Globalization of EconomyReform and Globalization of Economy

• • Reform and globalization of economy have Reform and globalization of economy have created a diverse and open economy in both China created a diverse and open economy in both China and Iran. and Iran.

• • Economic change has also caused social Economic change has also caused social problems in both countries - in Iran the split problems in both countries - in Iran the split between the rich and the poor and China with a between the rich and the poor and China with a sharp increase in crime, prostitution, and drug sharp increase in crime, prostitution, and drug use. use.

• • Iron Rice Bowl - (China) Characterized Maoist Iron Rice Bowl - (China) Characterized Maoist economy. Certain standard of living was offered to economy. Certain standard of living was offered to the people of the urban and rural labor force. Still the people of the urban and rural labor force. Still income distribution was unfair. In the 1970s Iran income distribution was unfair. In the 1970s Iran was one of the most unequal countries. was one of the most unequal countries.

Reform and Globalization of EconomyReform and Globalization of Economy

• • Dual society in Iran. - The modern sector, Dual society in Iran. - The modern sector, with the wealthy elite and the oil and the with the wealthy elite and the oil and the traditional sector with all the workers. traditional sector with all the workers.

• • Iron rice bowl led to massive Iron rice bowl led to massive unemployment - 45 to 60 million workers unemployment - 45 to 60 million workers have been laid off in recent years. have been laid off in recent years.

• • China’s health care system has been China’s health care system has been rated amongst the worst by the World rated amongst the worst by the World Health Organization. Unlike Iran, between Health Organization. Unlike Iran, between 1963 and 1977, the number of hospital 1963 and 1977, the number of hospital beds doubled and medical clinics from beds doubled and medical clinics from 700 to 2,800. 700 to 2,800.

Reform and Globalization of EconomyReform and Globalization of Economy

• • China’s economic boom has led to China’s economic boom has led to corruption. - In transition from command corruption. - In transition from command to market economy, officials are still in to market economy, officials are still in control of several resources and control of several resources and economic transitions. economic transitions.

• • Iran’s rentier state led to the state Iran’s rentier state led to the state becoming independent of society, leading becoming independent of society, leading to society having little input on the state. to society having little input on the state.

• • Gender inequality - In the countryside, Gender inequality - In the countryside, the male is in control and dominate the the male is in control and dominate the economy. Over 70% of illiterate adults in economy. Over 70% of illiterate adults in China are female. China are female.

China – Poverty RatesChina – Poverty Rates

Economic ReformEconomic Reform

Economic ReformEconomic Reform Efforts are being made Efforts are being made

by the current by the current administration to engage administration to engage in market reform plans.in market reform plans.

The Iranian government The Iranian government is looking to diversify is looking to diversify Iran’s oil reliant economy Iran’s oil reliant economy through foreign and through foreign and domestic investment.domestic investment.

China’s economy is China’s economy is transforming into a market-transforming into a market-style economy, which has style economy, which has created anti-reform created anti-reform opposition.opposition.

Anti-reformists are wary of Anti-reformists are wary of the spread of capitalist the spread of capitalist influences, including calls for influences, including calls for democracy both within and democracy both within and outside China CCP leaders outside China CCP leaders hope that the people of China hope that the people of China will attribute the Country’s will attribute the Country’s economic prosperity to its economic prosperity to its political stability and be political stability and be satisfied with the communist satisfied with the communist party.party.

ChinaChina IranIran

Economic ReformEconomic Reform The sale of state-owned The sale of state-owned

factories has been slow factories has been slow because of opposition from because of opposition from Iranian nationalists in the Iranian nationalists in the Majles. The majority of Majles. The majority of industries remain state-owned.industries remain state-owned.

The government has increasing The government has increasing difficulty in providing difficulty in providing opportunities for the younger opportunities for the younger and better-educated workforce, and better-educated workforce, which has led to a growing which has led to a growing sense of frustration among sense of frustration among lower and middle class Iranians.lower and middle class Iranians.

Economic reform has Economic reform has created many different created many different groups such as groups such as entrepreneurs, middle entrepreneurs, middle class consumers, etc. class consumers, etc. that are more likely to that are more likely to press for political reform press for political reform in the future.in the future.

The decentralization of The decentralization of economic decision economic decision making has increased making has increased the autonomy of sub-the autonomy of sub-national governments.national governments.

ChinaChina IranIran

Hong Kong and ChinaHong Kong and China

On July 1st 1997, Hong Kong became a On July 1st 1997, Hong Kong became a Special Administrative Region of China.Special Administrative Region of China.

Previously a British colony, Hong Kong Previously a British colony, Hong Kong flourished economically and became one of flourished economically and became one of the world’s greatest centers of international the world’s greatest centers of international trade and finance despite having extremes of trade and finance despite having extremes of wealth and poverty.wealth and poverty.

China pledges under the principle of one China pledges under the principle of one country, two systems to not impose socialism country, two systems to not impose socialism in Hong Kong for fifty years yet it still has a in Hong Kong for fifty years yet it still has a tight grip on Hong Kong’s political activity.tight grip on Hong Kong’s political activity.

Economic StyleEconomic Style

Economic styleEconomic style Iran- rentier state (obtains income by exporting and Iran- rentier state (obtains income by exporting and

leasing raw materials.)leasing raw materials.) China- command economy transferring to market China- command economy transferring to market

economy (state controlled economic activity moving economy (state controlled economic activity moving towards influence by global market.)towards influence by global market.)

Economic development- GDPEconomic development- GDP Iran- 6.3% (oil)Iran- 6.3% (oil) China- 7.6% (services, agriculture)China- 7.6% (services, agriculture) Market- populationMarket- population Iran- 68,017,860Iran- 68,017,860 China- 1.306 billionChina- 1.306 billion Supply and DemandSupply and Demand Iran- increase supply, decrease demandIran- increase supply, decrease demand China- increase supply, increase demandChina- increase supply, increase demand

Agricultural related taxes and their shares Agricultural related taxes and their shares in government finance and agricultural in government finance and agricultural

value - Billion Yuan current pricevalue - Billion Yuan current price

Distribution of Tax and Fees Distribution of Tax and Fees Shouldered by Chinese FarmersShouldered by Chinese Farmers

The End!The End!