Produced by the Southern Center for International Studies © 2008 Southern Center for International Studies East Asia in Transition

Produced by the Southern Center for International Studies© 2008 Southern Center for International Studies

East Asia in Transition

East Asia in Transition, Lesson 3: East Asian Economics, Activity 1 2

Lesson 3

East Asian Economics

Activity 1

What are the different economic systems in East Asia?


East Asian Economic Systems

• The four major economic systems can be found in East Asia– Traditional

– Command

– Market

– Mixed

• Most East Asian countries have mixed economies, somewhere between pure market and pure command – Most countries also have areas with traditional economies

• East Asian governments tend to be very involved in setting the direction of the economy– More involved than the government of the United States


Comparing Economic SystemsWorksheet 1

Economic System

What is produced?

How is it produced?

For whom is it produced?

Who decides?

Traditional

Command

Market

Mixed


Traditional Economies

• Most traditional economies are found in agricultural, non-industrial countries.

• The elders of society make the major economic decisions. These decisions are often based on the traditions of the culture.


Traditional Economies(continued)

• The society’s traditional beliefs and customs set into motion most of the economic activity. Each generation passes down the knowledge of how to make things common in that culture.

• Most of the usable products are produced from raw materials found in nature. These products are created by hand and physical labor.



• Trade often occurs through barter and the simple exchange of goods or services.

• The economy is at the subsistence level, the level at which most people’s basic needs are met.



• Traditional economies do not usually grow or progress much. Basic needs are the only necessities that are met.

• Cultural traditions often hold back the development of new products and trade.


Command Economies

• All aspects of the economy (factories, public services, and land) are owned by the government. There is no private ownership.

• One person or group holds total economic control over the country. This person or group makes all of the economic decisions determining what and how much is to be produced and to whom it is sold.


Command Economies(continued)

• In theory, the society’s top priorities are determined and then goods and services are produced to meet the people’s needs. All people receive an equal amount of goods and services.

• In practice, the country’s decision makers determine the goods and services produced. These decisions actually advance the government and its leaders, not the people.



• The decision makers can quickly make changes to adjust to economic conditions. They face little or no opposition.

• Command economies hold back innovation and personal development among the people. There is no incentive and people have little or no opportunity to develop or improve conditions.



• Goods and services that are favored by the decision makers are produced by the most modern means. Goods and services least favored are usually produced by hand and traditional methods.


Market Economies

• All decisions in the economy are made by the privately owned businesses without control from the government.

• The main factors that control the economy are supply and demand. Supply and demand is determined by the market’s (the people’s) personal interests and desires.


Market Economies(continued)

• Decisions are made by businesses based on what the competition is doing, what labor and raw materials are available, and what is the least expensive way to produce the most amount of goods and services to make the greatest profit.

• Freedom of choice is preserved in all aspects of the economy. Individuals and businesses decide what to produce, how much, and for whom. People are free to decide what they want to buy and sell. The people also decide what they want to do for a living.



• The goods and services produced are determined by what the people want and how much they are willing to pay.

• Competition among individuals and businesses encourages innovation and creativity. Being able to do something better than the competition allows a business or an individual to prosper and grow.



• Because of free choice and competition, goods are produced by the most modern and efficient methods. This results in products that are high in quality, high in quantity, and less expensive.

• There is an uneven distribution of wealth among the people. Wealth goes to individuals who can make the greatest profit through hard work, talent, and creativity. They also profit from their ability to produce goods and services at the cheapest rate and sell them for the highest price.



• There is no government regulation of the economy. If individuals or businesses cheat or produce inferior products or services, eventually the market will stop buying from them. Then they will be forced to change or go out of business.


Mixed Economies

• Mixed economies contain various aspects of all three major economic types.

• All three of the systems are present, but one is a stronger influence than the others.

• Over time, the three economic systems become more or less dominant in a mixed economy as the government and the market try to satisfy the needs of the people.


Group Activity

• Choose one of the following pairs of countries. Discuss similarities and differences between each country’s main economic system and whether the government or the market are the main influence in the economy. – Japan and China

– Laos and North Korea

– Japan and Laos

– China and North Korea


Lesson 3

East Asian Economics

Activity 2

What are the factors that influence growth in East Asian countries?


East Asian Economic Growth

• East Asian countries are seeing extensive growth in their gross domestic product (GDP)

• Growth is due to

– Foreign investment

– More open markets

– The increased use of productive resources• Capital

• Human

• Natural


Gross Domestic Product

• Gross Domestic Product (GDP)

The total market value of all final goods and services produced within the borders of a country in one year

– GDP is a way of understanding the health of a country’s economy

– Measured in the specific country’s currency, but usually reported in U.S. dollars


Productive Resources and Entrepreneurs

• Goods and services are produced by:– Capital resources

• the money, tools, and equipment used to produce something

– Human resources• workers

– Natural resources• things from nature used to make the product

• Entrepreneurs are the people who take these resources and make them into goods and services– They buy natural and capital resources, and pay human

resources, to produce.


East Asian ProductsWorksheet 1

PRODUCTIVE RESOURCES TYPE OF RESOURCE

rice

engineer

computers

crude oil

fish

accountant

lumber

rubber tree sap

steel

farmer


East Asian ProductsWorksheet 1


rice

engineer

computers

crude oil

fish

accountant

lumber

rubber tree sap

steel

farmer

natural resource

human resource

capital resource

natural resource

natural resource

human resourcecapital resource

natural resourcecapital resource

human resource


East Asian Products Worksheet 1 (continued)


computer software

automobile

coal

commercial space vehicle

machinist

textiles

chemicals

cattle

tea

teacher


East Asian Products Worksheet 1 (continued)


computer software

automobile

coal

commercial space vehicle

machinist

textiles

chemicals

cattle

tea

teacher

capital resource

capital resourcenatural resource

capital resource

human resource

capital resource

capital resourcenatural resource

natural resourcehuman resource

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Produced by the Southern Center for International Studies © 2008 Southern Center for International Studies East Asia in Transition