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Factors of Economic Growth in Saudi Arabia and Iran

Adil Sahin
By Adil Sahin
7 years ago
Factors of Economic Growth in Saudi Arabia and Iran


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  1. FactorsofEconomicGrowth inSaudiArabiaandIran
  2. Whatarethefactorsthatin fluencea country’seconomicgrowth? •  SS7E7 –  A.ExplaintherelaBonshipbetweeninvestmentin humancapital(educaBonandtraining)andgross domesBcproduct(GDP). •  Humancapital:theknowledgeandskillsthatmakeit possibleforworkerstoearnalivingproducinggoods andservices. •  GrossDomesBcProduct(GDP):isdeterminedbytaking thetotalvalueofallgoodsandservicesproducedbya countryinasingleyear.
  3. Whatarethefactorsthatin fluencea country’seconomicgrowth? •  SS7E7 –  B.ExplaintherelaBonshipbetweeninvestmentin capital(factories,machinery,technology)and grossdomesBcproduct(GDP). •  Capitalgoods:thefactories,machines,andtechnology thatpeopleusetomakeothergoods –  Beingabletoproducemoregoodsforsaleinaquickerand moreefficientwayleadstoeconomicgrowthandgreater profit.
  4. Whatarethefactorsthatin fluencea country’seconomicgrowth? •  SS7E7 –  C.Explaintheroleofoilinthesecountries’ economies. •  Naturalresourcesaretherawmaterialsacountryhas thatmaketheproducBonofgoodspossible. –  Oilisoneofthemostimportantandvaluablenatural resourcesintheMiddleEast.
  5. Whatarethefactorsthatin fluencea country’seconomicgrowth? •  SS7E7 –  D.Describetheroleofentrepreneurship. •  Entrepreneurs:creaBve,originalthinkerswhoare willingtotakeriskstocreatenewbusinessesand products. –  Willingtorisktheirownmoneytoproducethesenewgoods andservicesinthehopethattheywillearnaprofit –  Onlyabout50%ofallnewbusinessesaresBlloperaBngthree yearsaWertheybegin
  6. CapitalGoodsand GDP SS7E7b HumanCapitalandGDP SS7E7a •  5th Largest Producer of oil •  Led to advanced technology •  Highly regarded schools and universities •  Educated workers available for industries RoleofOil SS7E7c •  Most valuable resource: oil •  85% of country's wealth comes from oil •  Member of OPEC •  Has rich farmland and access to water for irrigation •  Great investments in oil production, technology, and communication •  Spent great deal of money on defense technology. Iran: Factorsof Economic Growth Entrepreneurs SS7E7d •  Small but growing number of entrepreneurs •  Iran is not very open to entrepreneurship •  highly centralized and regulations make it difficult for individual to open, operate, and close businesses •  little protection of private property rights.
  7. HumanCapitalandGDP SS7E7a Whattoproduce ? CapitalGoodsand GDP SS7E7b •  mainindustryisoilandpetroleum products. •  SaudiArabiahasinvestedheavilyin •  Thetechnologyinvolvedintheoilindustry capitalgoods iscomplicatedandrequiresawell-trained •  Especiallythetechnologyrelatedto andeducatedlaborforce. oilproducBon,transportaBon,and •  SaudiArabiaalsohasmodern communicaBon. communicaBonandtransportaBons Saudi Arabia: •  TheGDPishigh. Factors of •  •  •  •  •  Economic RoleofOilSS7E7c Growth Hasveryfewnaturalresources,buthave Forwhomtoproduce? Entrepreneurs plentyofoil. SS7E7d OilproducBon:majorityofeconomic •  Saudi Arabia is increasingly open to wealth. entrepreneurship. HasbecomeveryinfluenBalintheworld economyasamemberofOPEC. •  The government makes opening, Allowsthecountrytomodernize operating and closing a business easy agriculture,spendingbillionsofdollarson compared to the world average. irrigaBonanddesalinaBontechnology. SaudiArabiahasgonefrombeinga“desert •  There is good protection of private property rights. kingdom”toamodernnaBoninlessthan 100years.