Download Factors of Economic Growth

Economics of
Southwest Asia (Middle
East)
Standard: SS7E7a-d
SS7E7 The student will describe
factors that influence economic
growth and examine their presence or
absence in Europe.
a.
Explain the relationship
between investment in
human capital (education
and training) and gross
domestic product (GDP).
Factors of Economic GrowthWhy does a country want to
grow economically?
All countries want economic
growth.
 Economic growth means that a
country is developing its economy,
increasing national revenue
(making money), and improving
its citizens’ standard of living.
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Factors of Economic
Growth
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Factor #1- Human Capital
Refers to the country’s investment in
training the citizens of a country,
providing educational opportunities,
and providing healthcare.
Think more locally- How does Georgia
provide a college education to its
students?
Why does Georgia do this?
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Investment in human capital provides
a healthier and better educated
workforce.
Why would a country invest in human
capital?
When a country’s people are more
productive and healthier, the economy
is stronger in that country.
More human capital = a stronger
economy.
How Do Capital Goods Help
a Country Grow
Economically?
Factor #2- Capital Goods
 Capital goods are goods used to
make other goods like factories,
machinery, and technology.
 The more capital goods a country
has, the more it can produce.
 The more a nation produces, the
more self-sufficient it is and the
more money it can make.
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More capital goods= more
economic growth.
 The opposite is also true: if a
country is experiencing political or
economic problems and the
production of capital goods
decrease, there is less economic
growth.
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How Do Natural Resources
Help a Country to Grow
Economically?
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Factor #3- Natural Resources
What is a natural resource? Nations
that are rich in natural resources can
export (trade) countries for revenue.
Have students look at natural
resources in Southwest Asia. What
natural resources are found in SW
Asia?
How are the natural resources
distributed in SW Asia?
How do you think the availability
of natural resources in a country
affects its economic growth?
 Turn and talk with your neighbor.
 Finish this equation more natural
resources = more_____________.
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How Does Entrepreneurship
Help a Country Grow
Economically?
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Factor #4- Entrepreneurship
Do you remember what an entrepreneur is?
Entrepreneurs help a country grow
economically.
Private production by individuals helps the
nation to grow by creating competition
between businesses.
Can you think of businesses that compete
by producing similar products?
How does the competition
help the economy?
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Entrepreneurs think of new and better
ways to produce their product.
This innovation and invention leads to
production of more product therefore
providing more jobs.
More jobs mean more people have
money to spend.
More entrepreneurship= more
economic growth.
Gross Domestic Product
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Review the four factors which lead to
economic growth.
If a nation invests in these four
factors, the economy will _________.
If a nation produces many goods and
services and therefore has a strong
economy, the Gross Domestic
Product is high.
DEFINE GDP
The GDP of a nation is the total
amount of goods and services a
nation produces in a year.
 How do you think economic
growth and GDP are connected?
 Write a quick response in your
notebook.
 Discuss with the class.
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Connection between GDP
and a country’s economy
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The GDP is one way to compare countries’
economies.
The higher a countries’ GDP the stronger
the economy and therefore the country is
wealthier.
Sometimes it is easier to break down the
GDP into a per person average in a country.
This is called per capita income or per capita
GDP. On the average this is what a person
would make as an income in that country.
Southwest Asian Countries’
GDP based on per capita
(per person)- 2010
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Saudi Arabia- $24,200
Israel- $29,800
Bahrain- $40,300
Iraq- $3,800
Iran- $10,600
Afghanistan- $900
Kuwait- $48,900
Yemen- $2,700
United States- $47,200
Application
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Make a chart of these countries’
GDP per capita.
You may rank lowest to highest or
highest to lowest.
Make a bar graph of the per
capita GDP with a title for your
graph.
Write a paragraph describing the
conclusions you have drawn from
your graph.
What can you conclude about
these countries’ economies?
 What statements can you
make about certain countries’
factors of economic growth?
Remember #’s 1,2,3,4 from
the previous slides.
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c. Explain the role of oil in
these countries’ economies
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Do the Southwest Asian countries
listed in your graph have access to oil
fields?
How do you think the presence or
absence of oil resources in a country
affects economic development?
Does the presence of oil in a country
make the country’s economy stronger?