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March 25, 2021, 12:19:39 PM |
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Let us talk a little about economic systems on the knowledge we have from economics studies. Basically there are 4 types of economic systems and they are 1. Traditional economic system 2. Command economic system 3. Market economic system 4. Mixed economic system
We are going to look at two of the systems to see the differences and similarities in them and the reason for picking those two is because they are majorly practiced by different countries of the world. So we looking at number 2 - Command economic system and 3. Market economic system.
2. Command economic system
This is an economic system where high control and regulation is from the government. This means it centralized from top. As the name implies, economic activities are ordered strictly by the government at the center to say. All resources are channelled to the government including oil and other natural resources, government becomes the channel of control and regulation. These kind of economic system are mostly known with third world countries.
It has its advantages and disadvantages
It advantages are few,
1. It has low level inequality (though on theory)
2. Perceived equality and unifying good for heritage and acquisition.
Disadvantages
1. No seriousness: Of course they say government don't have business in doing business. Government personals are individuals from families and with emotions remember. So that can affect their decisions and activities. It may turn a family business or lackadaisical approach towards it.
2. Highly corrupt: I think because of the ineptitude in the part, certain aspect of revenue generation maybe manipulated or omitted. Example, countries that practice such has low tax accountability and regime, and their ROI , IGR (Internally Generated Revenue) is usually poor plus low GDP.
3. Monopoly: The system is likely to be hijacked by a few individuals at the top who may make policies to the favour of themselves.
3. Market economic system
This economic system I would say is directly opposite of the command economic system. Here, the government own little control of key economic activities in the country. As the name also implies, the people are involved in the policies of the economy and this allows the market forces to determine waves of prices. The government provides environment and the people have major control of the market. It can pass as a deregulated economy and countries practicing this system are the technologiically developed countries.
Advantages
1. High production level: This type of economy will encourage productivity, creation of jobs and employment because there suppose to be abundance of work to do.
2. Exportation: High level of exportation will go on from the system that encourages production and innovation.
Disadvantages
1. Bourgeoisie may emerge: As a result of free market, trade and production opportunity, wealth creation maybe vary and that may lead to unequal distribution of wealth.
There are many more advantages and disadvantages, please don't add more. Just contribute, thanks.
However, there are two sides to a coin as one good is bad for another. We just briefly discussed these two opposite economic system.
What do you have to say friends
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