HOW MANY TYPES OF ECONOMIC SYSTEMS IN GLOBAL MARKET

There are three types of economic systems:-- capitalist, socialist and mixed.These classifications are based on the method of resource allocation in the system, which is market allocation, command or central plan allocation and mixed allocation, respectively.

 

There are no pure examples of market or central plan allocation systems. All actual systems are mixed allocation.

* MARKET ALLOCATION

A market allocation system is one which relies upon the customer or consumer to allocation resources. Consumer choice or purchase under a market system decides what will be produced by whom. The market system is economic democracy-- money given you the right to vote for the goods of your choice. Consumers and customers write the economic plan of market allocation systems with their purchase decisions and purchase intention. The United states, Western Europe and Japan are predominately market allocation systems.

HOW MANY TYPES OF ECONOMIC SYSTEMS IN GLOBAL MARKET

The clear superiority of the market allocation system in delivering the goods and services that people need and want has led to its expansion to the former socialist block.

* COMMAND ALLOCATION

In a command allocation system resource allocation decisions are made by government planners. The number of automobiles, shoes, shirts, motorcycles, television sets and the size,color, quality, features and so on of every product are determined by government planners. Under the command system consumers are free to spend their money on what is available but the decisions about what is produced and therefore what is available are made by the state planners. The former soviet Union and China were leading examples of countries relying upon command allocation. Both countries are shifting to a market allocation system. Cuba is an example of the last remaining predominately command allocation economic system.

* MIXED SYSTEM

There are no pure market or command allocation system . All market systems have a command sector and command systems have a market sector. All capitalist market systems are "mixed" The command allocation of the market economy is the proportion of gross domestic product that is taxed and spent by government. Just as the market economies have command sectors, command economies have market sectors where production and prices are set by forces of supply and demand.

CONCLUSION :-

There is a growing consensus about the effectiveness of a market system in delivering value and deregulation. this has led voters and governments to support initiatives to move toward the privatization of services that had been part of government owned or regulated industries.

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