Economic Systems
Economic System (Types, Advantages & Disadvantages)
Economy: Economy is the wealth and resources of a country in terms of production and consumption of goods and services.
Economic System: An economic system is a way in which a nation organizes, manages or controls the factors of production (resources) so that the wealth of the country is somehow distributed among its population. How these factors of production are controlled and distributed defines economic system. There are different ways for a society to organize its economy. The people might follow traditions, following the same pursuits as their parents and grandparents. The government might decide what’s right for the country or it may stay out of it, leaving the economic system to be determined by the millions of people.
Types of Economic Systems: • Traditional economic system • Command economic system • Market economy • Mixed economy • Islamic economic system
Traditional Economy: It can be defined as an economy which is based on customs and beliefs which people get from generation to generation. In a traditional economy resources are allocated by inheritance. Some African countries (Malawi, Ivory Coast, etc) still use this system. It is also at work among Australian Aborigines and Amazon tribes.
Advantages: The main advantage of this type of economic system is that it produces only those goods and services which are required for the survival or which the people want to consume. Hence there is no wastage, it does not waste resources for goods and services which are unnecessary. Also in this economy everyone knows what there job is so there is no duplication of efforts. Traditional economies are less destructive to the environment.
Disadvantages: This type of economy resists any changes because the people tend to think that the methods which are followed by their ancestors for generations are correct and it leads to lower
Economy: Economy is the wealth and resources of a country in terms of production and consumption of goods and services.
Economic System: An economic system is a way in which a nation organizes, manages or controls the factors of production (resources) so that the wealth of the country is somehow distributed among its population. How these factors of production are controlled and distributed defines economic system. There are different ways for a society to organize its economy. The people might follow traditions, following the same pursuits as their parents and grandparents. The government might decide what’s right for the country or it may stay out of it, leaving the economic system to be determined by the millions of people.
Types of Economic Systems: • Traditional economic system • Command economic system • Market economy • Mixed economy • Islamic economic system
Traditional Economy: It can be defined as an economy which is based on customs and beliefs which people get from generation to generation. In a traditional economy resources are allocated by inheritance. Some African countries (Malawi, Ivory Coast, etc) still use this system. It is also at work among Australian Aborigines and Amazon tribes.
Advantages: The main advantage of this type of economic system is that it produces only those goods and services which are required for the survival or which the people want to consume. Hence there is no wastage, it does not waste resources for goods and services which are unnecessary. Also in this economy everyone knows what there job is so there is no duplication of efforts. Traditional economies are less destructive to the environment.
Disadvantages: This type of economy resists any changes because the people tend to think that the methods which are followed by their ancestors for generations are correct and it leads to lower