Economic System :: essays research papers

Economic System A country’s economic system consists of the structure and processes that it uses to allocate it’s resources and conduct it’s commercial activities.  Ã‚  Ã‚  Ã‚  Ã‚   Types of Economic Systems - Centrally planned economy - Mixed economy - Market economy Centrally planned economy System in which a nation’s resources are owned by the government. Origins: the ideology that the welfare of the group is more important than individual well being. (Karl Marx). Decline: In the 80’s nations began to dismantle communist central planning in favor of market based economy. Failures -economic value ,Provide incentives, Achieve rapid growth, Satisfy Consumer needs. Mixed economy Economic system in which resources are more equally divide between private and government ownership. Origins: the idea that a successful system must be not only efficient and innovative but should also protect society. Decline: mixed economies are converting to market system. (Privatization). Market Economy The majority of nations resources are privately owned. Economic decisions are determined by supply and demand. †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Origins: the belief that individual concerns should be placed above group concerns. †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Features: free choice, free enterprise and price flexibility. †¢Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Governments role: enforcing antitrust laws, preserving property rights, providing a stable fiscal and monetary environment and preserving political stability. Development of nations The economic development is a measure of gauging the economic well being of one nation's people as compared with that of another nation’s people. National development indicators: - national production - purchasing power parity - human development National Production Gross national product: value of all goods and services produced by country during a one year period, including income generated by both domestic and international activities. Gross domestic product: value of all goods and services produced by a country’s domestic economy over one year period. GDP or GNP per capita: nation’s GDP or GNP divided by it’s population. Purchasing Power Parity Purchasing power: the value of all goods and services that can be purchased with one unit of a country's currency. Purchasing power parity: is the relative ability of two countries’ currencies to buy the same â€Å"basket† of goods in those two countries. Human Development Human development index: The measure of the extent to which a peoples needs (healthy life, education, decent standard of living) are satisfied and the extent to which this needs are addressed equally across a nation’s entire population. Classifying countries Developed: highly industrialized and efficient countries that have a high quality of life. -USA,France, Italy, Canada.. Newly industrialized: recently increased the portion of it’s national production and exports from industrial operations ( emerging markets: developed + newly industrialized).