The Economies of Asia

Traditional Economy

• Needs are fulfilled in the same way as their ancestors.

Command Economy

The government determines what will be produced, how it will be produced and who it will be produced for in society.

Market Economy

• Individual businesses make their own decisions about what to produce and how to produce it without government regulations.

Mixed Economies• Communist –The government

produces all of the consumers’ needs and wants.

• Socialist –The government produces the consumers’ needs and private businesses produce the wants.

• Capitalist – Private businesses produce most basic needs and wants with some government regulations.

Economic Systems

Pure

CommandPure

Market

Economic

Systems

Pure

MarketPure

Command

Iran

45%

Saudi Arabia

64%

Israel

68%

Economic

Systems

Pure

MarketPure

Command

Nigeria

55%

South Africa

64%

Economic

Systems

Pure

MarketPure

Command

North Korea

2%

India

54%

Japan

73%China

53%

India’s EconomyMixed Economy

• It is a mixture of the traditional and the modern.

• In villages, farmers still work in the fields.

• There are also modern factories and high-tech service industries.

• Almost 60% of India’s workforce are farmers who grow barely enough to feed their families.

• India’s leading crops are rice, wheat, cotton, and tea.

• India is still considered a developing country.

India’s Economy, Cont’d• Its economy is large enough to

rank among the world’s top 10 industrial countries.

• Some Indians are very rich, but most are still poor.

• Booming electronics industry, producing computers, software, televisions, CD players, VCR’s, launched several communications satellites systems and leads the region in a number of related fields.

• Bollywood films are as popular in Southern and Eastern Asia as are films in U.S.

China’s Economy

• When the Chinese Communists took over in 1949, they set up a nearly pure command economy.

• The Communists took over an economy that was almost solely based on farming.

• Today, China produces everything from satellites to rockets to toys.

China’s Economy, Cont’d

• In the late 1970s, the gov’t introduced elements of free enterprise.

• Now, farmers can grow and market their own crops on part of their rented land.

• Millions of Chinese have started their own small businesses.

Japan’s Economy

• Japan has few natural resources, so it must import many raw materials to run its industries.

• The country produces about 1/3 of its energy through nuclear power.

• Japan has the world’s largest fishing industry.

• Fish is a major part of the Japanese diet.

Japan’s Economy, Cont’d

• Japan is known for its high-quality cars and items like TVs, cameras, and CD players.

• Their economic success is due partly b/c of a high literacy rate and partly b/c of the peoples’ strong work ethic.

• Japan’s market economy depends on trade, especially with countries in the Pacific Rim.

North Korea’s Economy

• This is one of the world's most centrally directed and least open economies.

• The central government plans the economy, controls what’s produced, owns all land and housing, and controls access to jobs.

• Only 14% of North Korea’s land can be farmed.

• It’s farmed by cooperatives-groups of farmers who work the land together.

• Some people grow food for themselves in small gardens.

North Korea’s Economy, Cont’d

• North Korea doesn’t produce enough food to feed its people and historically imported needed food from the Soviet Union. When it collapsed it lost its main source of food and has faced famine at times.

• Poor harvests in the mid 90s made things worse, famine ensued, and thousands starved to death.

• North Korea is rich in mineral resources.

• They make machinery, iron, and steel, but their factories use outdated technology.

• The government has invested in nuclear power plants.

Gross Domestic Product (GDP)Market value of all final goods and services produced in a country in a year (Final goods and services

have been purchased for final use. They are not for resale or further manufacture)

ConsumptionSpending by households on goods and services, including spending on such things as cars, food and visits to the dentist. This makes up 2/3 of the GDP spending.

InvestmentSpending on business machinery, factories, equipment, tools and the construction of new buildings.

Net ExportsNet exports are calculated (x-m) where x is exports and m is imports.

Spending by people not living in the US on goods and services made in the US

MinusSpending by people in the US on foreign goods and services.

GovernmentSpending on all levels of government on goods and services, including spending on the military, schools and highways.

C + I + N + G

GM cars, Coca Cola

Call center service

minus

The sum of CING is GDP

Factors that influence GDP (make it go up and down):

1) Investment in physical and human capital – • New Jobs / New Factories

2) Incentives to save, invest and increase productivity • Government / Employer

3) Low Inflation • Economic condition in which prices of goods and services increase

• Gas Prices, Grocery prices go up!

4) Political Stability

5) Economic Freedom

6) Free Trade