Economics and Africa

1. Economics and Africa

2. SS7E1,5, and 8a Comparing traditional, market and command economies and how they answer the economic questions

3. SS7E1b Explain how countries have a mixed economy located on a continuum between pure market and pure commandSS7E1c Compare and contrast the economic systems found in Nigeria and South Africa

4. SS7E2a Explain how specialization encourages trade between countries. Compare and contrast different types of trade barriers such as tariffs, quotas and embargos. TRADE! • Specialization countries specialize in what they do best. It is an efficient way to work and costs less to produce items. A country gets what it needs at the lowest cost when produced by someone who specializes in that item • Voluntary trade-both parties expect to gain from the trade Most of Africa’s trade is with countries outside of Africa. • Tariffs- high tariffs between African countries because they have many of the same products. Tariffs keep competition out. • Quotas-limit put on number of cheap Chinese textiles imported to South Africa. This was to give South African clothing businesses a chance to compete. • Embargo on Liberia against diamonds because money from the diamonds was used to fund wars in Africa Known as conflict diamonds (AKA Blood Diamonds). Be able to identify examples!

5. SS7E2b Explain why international trade requires a system for exchanging currencies between nations. • Exchanging Money-International trade requires a system of exchanging currencies between nations. Money from one country must be converted to the currency of another to pay for goods in that country. • Exchange rate-How much is one currency worth in terms of the other. S.A – rand, Nigeria-naira

6. A little practice: Examples- ONE DOLLAR= 8 South African rands or 120 Nigerian naira • Taylor has $10.00. She wants to buy a CD in South Africa that costs 80 rands. Once she exchanges her American money for rands will she have enough money to buy the CD?________________________ • Michael wants to buy a soccer ball that costs 1300 in Nigerian naira. He has $15.00 After he makes the currency exchange, will he have enough to buy the ball?______________________________ • Oba has $25.00. She wants to buy a shirt in Nigeria that costs 2500 naira. Does she have enough money to buy it once she makes the currency exchange?_________________________________

7. SS7E3 Describe factors that influence economic growth and examine their presence in Nigeria and South Africa • Factors that influence Economic growth: • Human capital-people who perform labor • Capital-factories or machinery • Natural resources-things that come from nature like minerals or trees • Entrepreneurship a person with an idea or product who takes a risk to start a business • GDP (Gross Domestic Product) - total market value of goods and services produced by an economy during a period of time.

8. SS7E3 a. explain investment in human capital and GDP • Acountry needs to invest in HUMANCAPITAL. Investing in education and skills training will help to increase the country’s GDP. A smarter more productive workforce leads to economic growth. • South Africa invests a lot in education. They realized they needed to improve their workforce. This is paying off! SA GDP has been growing yearly. • Nigeria has very little in their budget for education so human capital growth is difficult. They relied so much on oil that they ignored education and training in other areas. The oil wealth belongs to a small group of people.

9. SS7E3. explain investment in capital and GDP • South Africa has also invested in capital growth. Electrical output, to help the transportation of goods-they invested in railways and ports. HOWEVER-50% still lives below the poverty line. • The Nigerian government has not spent money wisely. It has little money to invest in capital resources.

10. SS7E3 explain how the distribution of gold diamonds uranium and oil affects the economic development of Africa UNEVEN DISTRIBUTION OF WEALTH Should a country rich in natural resources be wealthy? You would think the answer should be yes. However, government instability plays a part in this! (AGAIN!) • Half of the world’s diamonds are found in Africa. Botswana has used this wealth towards its economy to build infrastructure. BUT rebels in other unstable countries have stolen diamonds and used the money to support their wars. • South Africa has half of the world’s gold. It is the basis for its strong economy. But other countries that have gold are not as strong.

11. Oil and Uranium Oil In Nigeria- it has caused serious pollution problems. oil money goes directly to corrupt politicians. Most Nigerians are very poor. They rely on foreign investment to help with infrastructure and China sends workers that take Nigerian jobs along with its investment money. They also import cheap Chinese goods that wipe out local competition. URANIUM This is a radioactive element used to produce nuclear power and make weapons. Many African countries have uranium. It is easy to mine as it is close to the surface. This is bringing in jobs as well as money. This holds a lot of promise for African nations as the world turns to alternative resources of power.

13. SS7E3d describe the role of entrepreneurship ENTREPRENEURSHIP • Nigeria could use some good new ideas but banks won’t lend money. International companies are trying to invest so they help the entrepreneurs. • South Africa has many small businesses. 98% of the firms in the country are small. Colleges are investing in teaching people how to run a business.