European Economic Factors

🙢

Essential Question

How do economic factors

influence Europe?

🙢

🙢 SS6E7a. Explain the relationship between investment in human capital

(education and training) and gross domestic product (GDP).

🙢 SS6E7b. Explain the relationship between investment in capital

(factories, machinery, and technology) and gross domestic product
(GDP).

🙢 SS6E7c. Explain the role of natural resources in a country’s economy.
🙢 SS6E7d. Describe the role of entrepreneurship.
🙢 SS6G11c. Evaluate how the literacy rate affects the standard of living in

Europe.

Standards

🙢

Human Capital:

Education

and training

Investments in
Human Capital

🙢

Education and the abilities it develops create

a smarter and more productive workforce,
which leads to greater economic growth.

Investments in
Human Capital

Multiple Choice

What does it mean to make an investment in human capital?

• Investing money in the stock market

• Investing in natural resources like land and minerals

• Investing in physical infrastructure like buildings and machinery

• Investing in education, training, and skill development of individuals

Examine the table below. In which country
would you most prefer to live? Why?

Least prefer? Why?

Country

Literacy

GDP per capita (person)

Life

Expectancy

Unemployment Rate

Germany

99%

$44,400

81

2.9%

Guatemala

74.5%

$4,529

74

4%

Haiti

61%

$1,025

64

14%

Kenya

81.5%

$1,550

66

8%

Lebanon

94%

$6168

79

29.6%

Open Ended

In which country
would you most prefer to live? Why?

Open Ended

In which country
would you least prefer to live? Why?

There is a relationship between literacy and human capital in terms of peoples ability to produce income and have a better life.

Country

Literacy
Rate

GDP per capita

(person)

Life

Expectancy

Unemployment Rate

Germany

99%

$44,400

81

2.9%

Guatemala

74.5%

$4,529

74

4%

Haiti

61%

$1,025

64

14%

Kenya

81.5%

$1,550

66

8%

Lebanon

95.1%

$6168

79

29.6%

Based on current data taken from the CIA World Factbook in 2022

Multiple Choice

Which country has the highest literacy rate?

• Germany

• Lebanon

• Kenya

• Guatemala

Education and economic success are closely linked!

Country

Literacy

Average Income (per

capita

in US dollars

Germany

99%

$51,040

Guatemala

74.5%

$4,500

Haiti

61%

$1,250

Kenya

81.5%

$29,191

Lebanon

95.1%

$41,934

● Without basic reading and writing skills, workers

become stuck in the lowest-paying jobs.

● Countries with a high literacy rate usually have a high

GDP per capita.

Multiple Choice

According to the information, what is the relationship between literacy rate and GDP per capita?

• There is no relationship between literacy rate and GDP per capita.

• Countries with a high literacy rate tend to have a high GDP per capita.

• Countries with a low literacy rate tend to have a high GDP per capita.

• Literacy rate and GDP per capita are unrelated.

Multiple Choice

Why is having basic reading and writing skills important for economic success according to the information provided?

• Because it guarantees a high-paying job.

• Because it allows workers to easily switch jobs.

• Because it helps workers avoid low-paying jobs.

• Because it has no impact on economic success.

🙢

Human Capital, Literacy Rate,

and Standard of Living

If you can read, you can learn. If you can learn, you can
improve your work skills, and get a better job that pays a
better salary. If you have a better salary, you can improve

your standard of living.

A country that improves the literacy rate among its citizens
will improve the standard of living within that country and
improve its economy. Educated and skilled workers are an

important factor in a country’s economic growth.

Multiple Choice

According to the information provided, what is the connection between literacy rate and a country's standard of living?

• A higher literacy rate leads to a lower standard of living.

• A higher literacy rate leads to an improvement in the standard of living.

• Literacy rate has no impact on a country's standard of living.

• A lower literacy rate leads to an improvement in the standard of living.

Multiple Choice

Educated and skilled workers are important for a country's economic growth b

because they can get a _________ job with _______ pay.

• worse

  higher

• better

  higher

• better

  lower

• worse

  lower

🙢

Capital:
Factories

Buildings Machinery

Technology
Roads

Equipment, etc.

Investment in Capital Goods

Investment in capital helps economic growth by

providing workers with the best and newest
tools which makes them more productive, and

increases a country’s GDP.

Multiple Choice

What is an example of an investment in capital goods?

• Purchasing machinery for a manufacturing plant

• Purchasing a new car for personal use
• Going on a vacation
• Buying a new pair of shoes

Most European countries have
good education systems and

strong capital investment.

🙢
🙢 Technology such as the

internet and cell phones
has made our world
smaller.

🙢 It has completely

changed the way we
communicate with each
other, how we organize
work, and how we trade
globally.

Technology and Economic Growth

Entrepreneur: someone who has an idea for a good

or service and takes the risks to produce it. They

use human, capital, and natural resources to

produce their product.

European countries do not have as much

entrepreneurial activity as the United States because

of high taxes, lots of regulations, and job security.

The EU is encouraging its members to reduce taxes
and regulations on small businesses, and helping
set up training programs on how to run a business.

🙢

🙢 European entrepreneurs and innovators

turn their best ideas into products,
services and jobs for Europe.

🙢 Europe needs more entrepreneurship!

🙢 The main reason European countries have

low entrepreneurship is because people
are afraid of risk and failure.

European Entrepreneurship

Multiple Choice

What is the main reason countries have low entrepreneurship?

• Lack of education

• Lack of natural resources
• High population density
• People are afraid of risk and failure.

🙢 Entrepreneurship creates jobs and better

materials, products, technologies, etc.

🙢 The more entrepreneurs a country has,

the higher the country’s GDP

What could the countries of Haiti and Kenya do to make their economies stronger and more like the economy of Germany?

Country

Literacy
Rate

GDP per capita

(person)

Life Expectancy

Unemployment Rate

Germany

99%

$44,400

81

2.9%

Guatemala

74.5%

$4,529

74

4%

Haiti

61%

$1,025

64

14%

Kenya

81.5%

$1,550

66

8%

Lebanon

95.1%

$6168

79

29.6%

🙢

Natural resources are materials or substances that
occur in nature and can be used for economic gain.

Natural Resources

Natural resources are the fuel for

industry and a source of income when

exported to other countries.

Multiple Choice

What could the countries of Haiti and Kenya do to make their economies stronger and more like the economy of Germany?

• Invest in education and literacy improvement

• Focus on skills training and workforce development

• Diversify industries and promote entrepreneurship

• Improve infrastructure and access to financial services

• All of the above

From our geography studies, which

countries in Europe have many

valuable natural resources?

Germany

Russia

United

Kingdom

🙢
🙢 The UK (United Kingdom) has a successful economy in

part because of its valuable reserves of coal, oil, and
natural gas.

🙢 Germany has a successful economy in part because of its

valuable rivers, forests, and large deposits of coal and
iron ore.

🙢 Russia has many natural resources, but they are located in

remote areas and it is difficult and expensive to collect
them.

Natural Resources in Europe

Multiple Choice

Which factor contributes to the success of Germany's economy

• Valuable reserves of coal, oil, and natural gas

• Abundant rivers, forests, and large deposits of coal and iron ore

• Remote locations of natural resources

• Access to valuable reserves of coal, oil, and natural gas in close proximity

Economic growth in a country is measured

by the country’s Gross Domestic Product (GDP) in one year.

Gross Domestic Product

(GDP)

Multiple Choice

How is a country's economic growth measured?

• By the number of skyscrapers
• By the population size
• By the Gross Domestic Product (GDP)
• By the number of cars

🙢

GDP = the total of goods and services
produced in one year within a country

Gross Domestic Product

(GDP)

GDP per capita is a measure of the total output of

a country that takes the GDP and divides it by

the number of people in the country.

Multiple Choice

What does per GDP per capita mean?

• It means the total GDP of a country
• It means the GDP divided by the total population of a country
• It means the GDP multiplied by the total population of a country
• It means the GDP plus the total population of a country

Economic growth is usually measured by
calculating the percent increase in GDP
from one year to the next. This is known

as the GDP Growth Rate.

GDP per capita and GDP growth rate can be

useful when comparing one country to
another because it shows the relative

performance of the countries.

Examine the table below. Which country

has the strongest economy? Why? Weakest? Why?

Country

GDP per capita (person)

Growth Rate

Germany

$50,082

9.84%

Italy

$31,551

11.67%

Russia

$12,173

19.79%

Ukraine

$4,836

28.89%

United Kingdom

$47,334

15.17%

Open Ended

Which country

has the strongest economy? Why?

Open Ended

Which country

has the weakest economy? Why?

Countries such as Germany and the United

Kingdom have two of the strongest economies

in Europe; therefore, they have high GDPs.

Other European countries such as Russia and the
Ukraine are slowly transitioning from a command

economy (during the Soviet Union era), so they have
lower GDPs. Both are also affected at this time by war.

🙢

Barriers to Trade

🙢 Tariff: A trade barrier that places a tax on

imported goods. (Tax)

🙢 Quota: A type of trade barrier that places a

limit on the amount of a good that can be
imported into a country. (Limit)

🙢 Embargo: Type of trade barrier that forbids

trade with another country. (Ban)

Multiple Choice

What is a tariff

• A type of tax on imported goods
• A type of currency
• A type of trade agreement
• A type of government policy

Multiple Choice

What is a quota

• A type of fish
• A type of bread
• A type of dance
• A limit on the amount you can produce or consume

Multiple Choice

What is an embargo

• A type of dance
• A type of food
• A type of clothing
• A government order that restricts commerce with a specified country

The EU has eliminated tariffs to increase

free trade among its member nations.

The EU imposes embargoes to protect its

member nations and punish other countries

for political reasons.

The EU uses quotas to protect its member

nations from other countries and each other.

Trade in the European Union

Multiple Choice

What trade policy does the EU (European Union) primarily use to protect its member nations from other countries and each other?

• Tariffs

• Quotas

• Embargoes

• Free Trade Agreements

🙢

Use the Index of Economic

Freedom to compare countries of

Europe to the U.S.

Economic Factors

http://www.heritage.org/index/ranking