Today’s Warm-Up

“Guess that Country” – Resource Pool Activity (pick up by the turn-in tray)

TRANSITIONING ECONOMIES

The Main Idea…

During the 20th century, many countries experienced major systemic changes in their economies

Technological revolutions have “shrunk” the world and increased interdependence

Command Systems of the 20th Century Productive resources owned and

controlled by the gov’t Many productive resources spent and

consumed by and for the military Low standard of living

Transition from Command to Market New characteristics with transition:

Private property rightsProfit = new motivation; spurs growthPrice system allocates resources, goods,

and servicesCompetitionEconomic freedom

Transition from Command to Market New role of government:

Protect property rightsEnsure competitionProvide public g/s like roads and national

defense

From Command to Market Over time, many nations have evolved

as mixed market systems with gov’t’s role expanding to include:Regulating businessesCorrecting for externalities (i.e. pollution)Redistributing income

From Command to Market New values and priorities:

Shift from social cooperation to individual freedom and responsibility

From Command to Market Challenges with transition:

From collectivization to privatization Profit = brand new incentiveElimination of price ceilings on all g/sUnemployment Corruption / Increased crimeInflation / Shortage of goodsMonetary system

From Command to Market Those countries which have transitioned

successfully have seen increases in the standard of living for their citizens

Today’s Focus

How do command economies move from government ownership of productive resources to private ownership?

Case Study: China and India Complete the document based

investigation on pgs. 633 – 637 Analyzing the Issue (pg. 637) – Be

ready to discuss #1 and #4! How are the giant emerging economies of

India and China affecting the world?What steps do you think the U.S. could take

to meet the challenge of global competition?

Today’s Exit Ticket

3 – challenges faced by transitioning economies

2 – positive changes that come with transition

1 – method of privatization you think is best