Download How a country manages its productive resources (natural, capital

SS7E7 The student will describe factors that influence
economic growth and examine their presence or absence in
Israel, Saudi Arabia, and Iran.
Explain the relationship between investment in human
capital
• (education and training) and gross domestic product
(GDP).
Explain the relationship between investment in capital
(factories, machinery, and technology) and gross domestic
product (GDP.
How a country manages its
productive resources (natural,
capital, and human) can make a
large difference in the success of its
economy.
Investment in education and
training of a country’s people has a
direct correlation in a country’s
Gross Domestic Product.
Israel believes that a quality education
system builds a productive work force.
Therefore, Israel has highly educated
workers, with scientists, engineers,
and entrepreneurs.
Literacy rate: 99%males 96% females
GDP per capita: $31,400
Israel makes investment in its
capital resources too. Israel has a
modern infrastructure and
supports its technology industry.
Israel encourages entrepreneurship
by offering:
*a tax structure which is positive to small
businesses
* a technological program that assists research
and developmental projects
* a program that trains immigrants and people
over 55 to start their own businesses.
Saudi Arabia has a healthy GDP
because its economy is supported
by oil. However, the Saudis have
recognized that the oil supplies will
not last forever.
Many of the skilled workers in Saudi
Arabia are there from other countries
because the Saudis have a shortage
of skilled workers. The Saudi
government is exploring other ways
to keep the economy strong.
Over the past decades, the Saudi
government has invested in human
capital by sending university students
abroad to study.
However today, the government is in
the early stages of completely revising
their education system.
The Saudi government realizes that a
good education system is necessary for
continuous growth.
Saudi Arabia Literacy rate:
90% males
81 % females
GDP per capita: $24,500
How do you think literacy rate
affects the Gross Domestic
Product?
Only about 1/3 of the Saudi Arabia
roads are paved.
This makes transporting oil from the fields
to the industrial centers very difficult.
However, building roads on the
desert terrain is not an easy task..
So, Saudi Arabia is investing in their
capital investment by building a
massive railway project to help
make transporting easier.
Saudi Arabia is also building
factories and modernizing its
infrastructure.
To expand its economy even further,
Saudi Arabia is planning to build new
cities. One is the King’s Economic City
which will be wired for the highest
speed internet in the world.
Saudi Arabia is trying to diversify its economy
and is helping people become entrepreneurs by:
*cutting the time it takes to meet government requirements to
start a business
*starting an entrepreneur institute to lend support
However, Saudi Arabia still has some rigid employment
laws that are discouraging to many would –be
entrepreneurs.
Iran’s Economy
Iran’s economy relies heavily on oil.
In fact, oil provides the government
with 85% of its income.
Iran continued
Over the years, Iran’s lack of investment in its
people (human capital) has caused many
problems including unemployment and lack of
training for jobs that are available.
The education system in Iran is very weak, so
educated Iranians are seeking jobs in other
countries. Many Iranian university professors
are also seeking teaching jobs in foreign
countries, because the Iranian government
controls everything that is taught in Iran.
The Iranian government is beginning
to acknowledge this drain on Iranian
talent and is increasing its investment
in human capital.
The government is raising the priority
in education and its literacy rate. The
government is building new schools
and expanding its public colleges.
Iran’s health care compared to Iraq
and United States
Iran’s literacy rate:
Males 84%
Females 70%
GDP per capita: $13,200
Why do you think the literacy rate is so much
lower for women in both Saudi Arabia and Iran?
The Iranian government is also
realizing that its lack of investment
in capital has impacted its
economic growth. In the past, very
little of the oil profits have been
used to improve the oil facilities.
Recently, Iran is increasing its
investment in capital by investing in its
telecommunication system, roads, and
machinery.
Entrepreneurs in Iran
The number of entrepreneurs in
Iran is small, but growing.
It is not easy to be an entrepreneur
in Iran.
Credit (loans) are hard to obtain.
Hard to find good managers
Because Islamic law (Sharia law) prohibits
women from many careers, some Iranian
women are starting small businesses and
running them from their homes.
Information for chart
Investment in Human Capital
Israel – has quality education
Saudi Arabia – sends university
students abroad, the country is in the
process of updating their education
system.
Iran- not much investment, educated
Iranians are leaving the country.
Investment in capital
Israel – commited to investing in the infrastructure and
technology
Saudi Arabia- planning massive railway and road
projects to increase transportation within the country
Iran- lack of capital investment has hurt the growth of
the country’s economy
Supporting entrepreneurs
Israel – positive environment for entrepreneurs
Saudi Arabia – providing incentives to support
entrepreneurs in order to diversify their economy
Iran – entrepreneurs have many obstacles in
starting a business
IS oil a major factor in their economy?
Israel – no, because they do not have oil as a
natural resource
Saudi Arabia – yes
Iran - yes