Chapter 18: Comparative Market Structures

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Chapter 18: Comparative Market Structures

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Chapter 18: Comparative Market Structures. Throughout the 20 th century, developed countries fell into three main categories: Capitalism Socialism Communism . Capitalism. ADVANTAGES. DISADVANTAGES. Can’t satisfy everyone Not as many public goods Based on demand – may ignore the poor . - PowerPoint PPT Presentation

Transcript of Chapter 18: Comparative Market Structures

Page 1: Chapter 18:  Comparative Market Structures

Chapter 18: Comparative Market

Structures

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• Throughout the 20th century, developed countries fell into three main categories: –Capitalism–Socialism–Communism

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Capitalism

ADVANTAGES

• Efficient

• Freedom

• Decentralized

• Consumer satisfaction

DISADVANTAGES

• Can’t satisfy everyone

• Not as many public goods

• Based on demand – may ignore the poor

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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

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Communism ADVANTAGES

• Everyone is on an equal

socioeconomic field

DISADVANTAGES

• Central authority sets prices

• State owns the factors of

production

• Lacks effiency

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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

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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

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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

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The Black Market: when goods are sold illegally

• Eastern European countries established black markets during

the transition to privatization

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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

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Chapter 19Developing Countries

Section 1

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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

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Most Wealthy Countries

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TURN TO PAGE 523 IN YOUR

TEXTBOOK

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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

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More Obstacles to Development

2. Limited natural resources

3. Lack of appropriate education and technology

4. Religion

5. Debt

6. Corruption

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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

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The World Bank (cont.)• Advises countries to

reduce trade barriers

• Also recommends that these countries invest in their people

• Help them help themselves

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Section 2 & 3: Financing Economic

Development

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Stages of Economic Development

1. Primitive Equilibrium – no formal economic organization

2. Transition

3. Takeoff

4. Semi-development

5. High Development

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The European Union • No regulation

for the flow of workers

• Citizens hold a common passport

• The Euro was first produced

in 2002

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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

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South Korea• Example of a developing

country that became successful

• 11th largest economy in the world