Economics of Latin America

Mrs. Sample6th Grade Social Studies

Factors that Influence Economic Growth

0Productive resources used to produce goods and services. 0Include: 0Human Capital0Capital0Natural Resources0Entrepreneurship

Human Capital

0People who perform labor0Example: 0Teacher0Cashier0Police Officer0 Telemarketer

Capital0Factories or machinery0Example0Copy Machine0Tractor0Coca Cola

Natural Resource

0Things that come from the land like minerals or trees. 0Examples0Tree0Diamonds0Water

Entrepreneurship0Ideas, innovations, and risks involved in

starting a business. 0Example0Bill Gates0Steve Jobs0Donald Trump0Jay-Z

GDP0Economists measure a nation’s economic

performance by this standard. 0GDP- Gross Domestic Product0Value of goods and services produced by a country

during a specific year. 0Economists use the GDP to determine if a country

is growing. 0Brazil and Mexico have the highest GDP. 0Haiti and Bolivia have struggling economies and

low GDP

0Investment in Human Capital- Giving training to employees or sending them to safety classes. 0Investing in Human Capital = Higher

GDP0Creates a smarter and more productive

workforce, which leads to economic growth.

How to Make your Economy GROW

Economies in Latin America0Still have widespread poverty0Many children work instead of attending

schools0Governments and Social Systems have

started to take steps to improve the education of workers. 0Mexico- President called for a change in

education system to better educate the children and in turn boost the economy.

Investment in Capital0Clear relationship between investment in capital

and growing GDP. 0Meaning: You buy new machines or computers and

software = more productive workers0Then, increase in GDP! 0Brazil has the highest investment in Capital

equipment0In contrast- Haiti does not invest in capital for

agriculture

Natural Resources0Natural Resources are the fuel for industry and a

source of income when exported to other countries. 0Brazil has rich mineral resource like iron ore (used

to make steel), fertile soil, lots of trees, and rivers. 0Mexico and Venezuela have oil deposits0Since these countries have valuable natural

resources, countries have specialized in industries to process these resources for use.

Entrepreneurs

0They come up with new ideas and use human, capital, and natural resources to bring ideas to life – and to the marketplace to sell! 0They are willing to take a risk, and share the

risk by borrowing money from a bank or investor to start their business. 0They help economies by creating new goods

or services.

Entrepreneurs in Latin America

0Unemployment rate is high among young adults. 0Countries are setting up courses and funding

college classes to help develop entrepreneurs. 0Governments and taxes make creating goods and

services hard. 0Example- it takes four months to get a business

started in Venezuela. 0Starting a business is a way to escape poverty in

many countries.

Specialization0An efficient way to work, and the cost of the

item is lower. 0Specialization increases trade because a

country can get what it needs at the lowest cost.

Opportunity Cost0Value of what is given up when a choice is made. 0Example: Country A makes cars and chocolate.

Country B only makes chocolate. Country A decides to only make cars because they are more profitable. Now they buy chocolate from Country B. Country A’s opportunity cost is the money they could have made from making chocolate. Country A decides it was better for them to specialize in cars than make both items.

Economic Systems Review0Traditional: Found in agricultural societies where

people live the same way their parents and grandparents did.

0Traditional economies are found in some places in Africa, Asia, and South America.

0These people produce only enough to survive by farming, hunting, and gathering.

0They make everything they need or barter for other necessities of live.

Economic Systems Review0Command: The government controls

what is produced and how it is produced. 0The government owns all resources and

decides who gets the products. 0This decision can be based on class, a

reward system, or waiting in line. 0An example is North Korea

Economic Systems Review0Market: A market system is when the people

make the economic decisions of what to buy and sell. 0People can own their own businesses and

produce what they want. 0In a market system, supply and demand for a

good or service determines what to produce and how to produce it. 0An example is the United States

Economic Systems Review0Mixed: Almost all countries fall between

a command and market economy. 0Government will own some resources

and the people will control other resources. 0For example, in the U.S. the government

controls schools, public colleges, postal service, and some power plants.

Brazil’s Economy0Government controls some and so do the citizens0Strong agricultural, mining,

manufacturing, and service industry. 0Brazil has the strongest economy of all

South American countries0The government controls some areas

such as healthcare and postal service

Cuba’s Economy0The government controls all aspects of

resources. 0The government owns all property and

decides what and how much to produce.0Cuba’s economy has struggled since the

break up of the Soviet Union in the 1990s. 0The Soviet Union was Cuba’s main trading

partner.

The End