Economies Around the World

Just as governments can be classified into different kinds….

• …the economies of the world can also be classified, based on industries.

Industry

• An industry is all the businesses that make one kind of product or provide one kind of service.

Examples: • Energy/Power Industry• Health Care Industry• Agriculture Industry

4 Main Kinds of Industries

1. Primary2. Secondary3. Tertiary4. Quaternary

Primary Industry

• A primary industry provides natural resources.

• What is a natural resource?

Primary Industry

Examples:• Farming• Fishing• Logging• Mining

1 Primary Industry 1• Brings natural resources to market.

• Usually the natural resources are the raw materials that a secondary industry uses to make goods.

2 Secondary Industry 2• …turns a natural resource into a finished

product.

Examples:• Clothing factories use raw wool or cotton to

make clothing. • Refineries turn petroleum into gasoline.• Mills turn iron ore into steel.

3 Tertiary Industry 3

• …sells and transports to market the natural

resources of _______________and the finished

products of ____________________.

Tertiary Industry

• Stores and trucking companies are examples of businesses in a tertiary industry.

• Tertiary industries provide not only goods but also services.

Tertiary Industry

Examples of services:• Banking• Education• Health care

4 Quaternary Industry 4• …involves research, information gathering, or business management.

Examples:• Scientists• Accountants• Architects• Lawyers• Engineers

Wait a minute…

• Don’t scientists, lawyers, architects, accountants, and engineers provide a service too?

Yes!

• Since they provide a service and information gathering, they are considered a part of the tertiary industry and quaternary industry.

Review

• What industry is a nurse in?

• Tertiary

Review

• What industry is the shipping business?

• Tertiary

Review

• What industry is farming in?

• Primary

Review

• What industry is an accountant in?

• Tertiary and Quaternary

Review

• What industry is a clothing manufacturer in?

• Secondary

“Developed or Developing?”

• The kinds of industries in a country can often determine whether the country is developed or developing.

• Countries that have well-established economies, generally with all four kinds of industries are called developed countries.

Developing Countries

• Countries whose economics are still being built are called developing countries.

• They generally have fewer kinds of industries.

GDP

• Developed countries have more kinds of industries, they produce more goods and services than developing one do.

• One measure of the total value of goods and services a country produces is its GDP, or gross domestic product.

GDP

• The GDP of developed countries is higher than the GDP of developing ones.

• Developed countries with a high GDP include the United States, whose GDP is more than 9 trillion dollars.

• The Caribbean country of Dominica, which is developing, has a GDP of just about 225 million dollars.

• The US GDP is 40,000 times larger than Dominica.

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Measure of a country’s economy

• 1. GDP: Gross Domestic Product

• 2. Standard of Living – how well its people live

Standard of Living

• How well a country’s people live. The standard of living can be indicated by the average person’s income and purchasing power, or spending.

• How much money do you have left after spending for basic needs?

Review

• How are economies around the world measured?

• By the country’s GDP and by the standard of living of the people.

Economic Systems

• Each country has an economic system or a way to make decisions about how to use its resources. (Examples: fish, trees, oil, coal, etc.)

Three Main Kinds of Economic Systems in the world today:

1. Traditional economy – shows little change over the years. People do the same kinds of work as people did in earlier times.

Traditional Economy

• Economic decisions are based on custom or habit.

• What have they always done?

• Most people in a traditional economy practice subsistence farming, raising only enough food for themselves and their families.

Subsistence farming

• If you only have enough food to feed yourself and your family, do you have enough to sell for money?

• Do you have money to buy new tools to improve your way of farming?

Subsistence Farming

• Since there is only enough food for survival, they must work as they always have.

• Traditional economies are found in many developing countries in Africa, Asia, and South America.

Three Main Kinds of Economic Systems in the world today:

2. Command Economy – the government or some central authority makes most of the economic decisions.

• Controls both farms and factories. • People and businesses are not free to make

their own decisions.

Command Economy

• The government determines what and how much will be produced.

• The government also decides how much the workers will earn and how much the goods and services will cost.

Command Economy

• This economic system, command economy, often leads to less than enough or too much of different products.

• The island country of Cuba in the Caribbean has one of the few remaining command economies in the world.

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Three Main Kinds of Economic Systems in the world today:

3. Market Economy – the people own and control businesses.

• The people make their own choices about which goods and services they will buy or produce.

• The people decide how they will spend their money and what kind of work they will do.

Market Economy

• This freedom of individuals and businesses in a market economy is often called free enterprise.

• Many countries in the world with democratic governments, including the US, have market economies.

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Canada

• Some democracies, like Canada, have a mix of market economy and command economy.

• Canada’s government has control over many parts of the country’s economy.

• Canada’s government controls major industries, such as broadcasting and health care.

Review

• How do democracies and market economies affect how people live?

• How do democracies and market economies affect how people live?

• Answer: People can choose their leaders and make decisions about how to spend their money.

Question 2

• How would your life be different if the government chose which products you could buy?

Answer

• How would your life be different if the government chose which products you could buy?

• Answer: Some items might not be available.

Question 3

• What is the difference between the economy of a developed country and the economy of a developing country?

Answer

• What is the difference between the economy of a developed country and the economy of a developing country?

• Developed countries (like the US) have a variety of industries.

• Developing countries have fewer industries.

Question 4

• What are the four kinds of industries? Give an example of each?

Answer

• Primary - farming• Secondary – clothing manufacturing• Tertiary- selling or transporting goods/services• Quaternary – scientist, architect

Question 5

• What kind of economy is usually found in democratic countries?

Answer

• What kind of economy is usually found in democratic countries?

• Answer: Market Economy

Question

• What are some benefits of free enterprise that are not found in a command economy?

Answer

• What are some benefits of free enterprise that are not found in a command economy?

• Answer: There are a greater variety of goods available to choose from.

Kinds of economy