Globalization and the Wealth Gap.. How can some nations with few natural resources, such as Japan...
-
Upload
emery-chapman -
Category
Documents
-
view
213 -
download
0
Transcript of Globalization and the Wealth Gap.. How can some nations with few natural resources, such as Japan...
With your partner, discuss the following.• How can some
nations with few natural resources, such as Japan and Singapore, be relatively wealthy?
• How can other nations, such as Nigeria and Russia, be relatively poor?
The Natural Resource Paradox• Natural resources have contributed to the
economic success of some nations, including the Untied States, South Africa, and the oil-rich nations of the Middle East.
• Other nations such as Japan and Singapore have achieved great economic success with relatively few natural resources.
• But, there are nations with vast stocks of natural resources that remain relatively poor.
• WHY?
Factors Contributing to Long-Term Economic Growth• High investment levels in physical and human capital.• Greater economic freedom• Lower taxes• Fewer government regulations• Effective monetary policy• Protection of property rights
• Strong incentives to save, invest, and increase productivity
• Competitive markets (Capitalism)• Low inflation• Political Stability• Free Trade
High investment levels
• Physical capital – factories and machines
• Human capital – the health, education, and training of workers
• Technological innovations have been the single most important determinant of economic growth, followed closely by investments in physical and human capital.
Greater Economic FreedomCountries with the Highest
Level 2002
1. Hong Kong2. Singapore3. New Zealand4. Estonia, Ireland,
Luxembourg, Netherlands, United States
9. Australia, Chile, UK12. Denmark, Switzerland14. Finland
Countries with the Lowest Level (2002)
144. Yugoslavia145. Burma, Syria147. Zimbabwe148. Belarus, Uzbekistan150. Turkmenistan151. Iran, Laos153. Cuba, Libya155. Iraq, North Korea
Strong Incentives to Save and Invest• Successful economies have institutions that
encourage saving and investment.• Successful investments lead to higher future
levels of production, income, and consumption.
Competitive Markets• Capitalism - an economic and political system in
which a country's trade and industry are controlled by private owners for profit, rather than by the state.
• Based on competition – think of concert tickets.• Competitive markets generate innovation and
lower prices.
Low Inflation• A stable currency maintains the value of financial
assets, which encourages saving and investment.• Unstable currency causes people to not spend
their money, which hurts the overall economy.
Political Stability• A change in government officials won’t cause
major changes in investments and consumption.• Citizens still feel safe, knowing that the
government is there to protect their assets, not take them away.
Free Trade• Trading leads nations to specialize in the
production and export of the goods and services that they can produce at the lowest cost.
• Trading those exports for other products that can be produced at a lower cost in other nations reduces the total cost of production and allows higher levels of consumption world wide.
• Free trade also results in increased competition which keeps prices lower for consumers.
• United States, Germany, United Kingdom, Canada, Japan, France, and Singapore are all heavily involved in international trade.