chapter 18: comparative market structures
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Chapter 18: Comparative Market
Structures
• Throughout the 20th century, developed countries fell into three main categories: –Capitalism–Socialism–Communism
Capitalism
ADVANTAGES
• Efficient
• Freedom
• Decentralized
• Consumer satisfaction
DISADVANTAGES
• Can’t satisfy everyone
• Not as many public goods
• Based on demand – may ignore the poor
SocialismADVANTAGES
• People use the election process to influence the WHAT,
HOW, and FOR WHOM questions…
Politicians provide many basic needs
DISADVANTAGES
• Less efficient as capitalism
• If workers have a government
guarantee of a job, hard work may be
scarce
• High taxes
Communism ADVANTAGES
• Everyone is on an equal
socioeconomic field
DISADVANTAGES
• Central authority sets prices
• State owns the factors of
production
• Lacks effiency
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
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
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
The Black Market: when goods are sold illegally
• Eastern European countries established black markets during
the transition to privatization
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
Chapter 19Developing Countries
Section 1
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
Most Wealthy Countries
TURN TO PAGE 523 IN YOUR
TEXTBOOK
Obstacles to Development
1. 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
More Obstacles to Development
2. Limited natural resources
3. Lack of appropriate education and technology
4. Religion
5. Debt
6. Corruption
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
The World Bank (cont.)• Advises countries to
reduce trade barriers
• Also recommends that these countries invest in their people
• Help them help themselves
Section 2 & 3: Financing Economic
Development
Stages of Economic Development
1. Primitive Equilibrium – no formal economic organization
2. Transition
3. Takeoff
4. Semi-development
5. High Development
The European Union • No regulation
for the flow of workers
• Citizens hold a common passport
• The Euro was first produced
in 2002
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
South Korea• Example of a developing
country that became successful
• 11th largest economy in the world
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