Tells about the types of economic systems around the world.

1. ECONOMIC
SYSTEMS
1. Traditional Economy
2. Command Economy
3. Market Economy
4. Mixed Economy

2. Economic System – MEANING:
• An economic system is a means by which societies or
governments organize and distribute available
resources, services, and goods across a geographic
region or country.
• Economic systems regulate the factors of production;
including land, capital, labor, and physical
resources.

3. TYPES OF ECONOMIC SYSTEMS :
 There are many types of economies around the world.
 Each has its own distinguishing characteristics, although they all
share some basic features.
 Each economy functions based on a unique set of conditions and
assumptions.
 Economic systems can be categorized into four main types:
traditional economies, command economies, market economies,
and mixed economies.

4. TRADITIONAL ECONOMY:
 The traditional economy is very basic and the most ancient of the
four types.
 It is commonly found in rural settings in second and third-world
nations, where economic activities are predominantly farming or
other traditional income-generating activities.
 It relies a lot on people, and there is very little specialization.

5.  The traditional system, unlike the other three, lacks the potential to
generate a surplus.
 The traditional economic system is highly sustainable. In addition,
due to its small output, there is very little wastage compared to the
other three systems.
 Two current countries that follow a Traditional based Economic
System are Bhutan and Haiti and agriculture is the Primary Sector
in both countries.

6. Agriculture in Bhutan Agriculture in Haiti

7. Command Economy:
 In a command system, there is a dominant, centralized authority –
usually the government – that controls a significant portion of the
economic structure. It is also known as a planned economy.
 Ideally, the government centralize control over valuable resources
such as gold or oil. The people regulate other less important sectors
of the economy, such as agriculture.

8.  In theory, the command system works very well as long as the central
authority exercises control with the general population’s best
interests in mind.
 Command economies are rigid compared to other systems.
 They react slowly to change because power is centralized. That
makes them vulnerable to economic crises or emergencies, as they
cannot quickly adjust to changed conditions.

9. • North Korea is the only active country following command economic system.
- North Korea under Kim Jong Un
• China (PRC), Cuba and the USSR (now broken) followed command
economy in the past.
China under Mao Zedong - Cuba under Fidel Castro - USSR under Joseph Stalin

10. MARKET ECONOMY:
 Market economic systems are based on the concept of free markets. In
other words, there is very little government interference.
 The government exercises little control over resources, and it does not
interfere with important segments of the economy.
 Instead, regulation comes from the people and the relationship between
supply and demand.

11.  The United States and England are examples of market economies.
 Arguably, growth is highest under a market economic system.
 The market economy’s greatest downside is that it allows private entities
to amass a lot of economic power, particularly those who own resources
of great value and so, distribution of resources is not equal.

12. New York Stock Exchange,
Wall Street,
USA .
Piccadilly Circus & its famous
advertising screens,
UK.

13. Hong Kong
 Traditionally billed as the world’s freest economy, Hong Kong remains
one of the most capitalist countries and strongest free market economies.
 It’s almost non-existent tariffs and small government are a recipe for
capitalist success. Although it is technically a “Special Administrative
Region” of China, it stands on its own as an independent free market.
 Hong Kong’s gross domestic product (GDP) per capita of over $40,000 is
one of the highest in the world, more than four times higher than China’s.

14. MIXED ECONOMY:
 Mixed systems combine the characteristics of the market and
command economic systems.
 For this reason, mixed systems are also known as dual systems.
Sometimes the term is used to describe a market system under strict
regulatory control.
 Most industries are private, while the rest, comprised primarily of
public services, are under the control of the government.

15.  Now-a-days, many developed and developing countries are
following this mixed system. Some are coming out of their old market
system into Mixed system.(Cuba, Russia – Command to Mixed; USA,
UK, Japan, Germany – Market to Mixed).
 Mixed systems are the norm globally. Supposedly, a mixed system
combines the best features of market and command systems.
 However, practically speaking, mixed economies face the challenge
of finding the right balance between free markets and government
control.

16.  India, France, Sweden are some of the best example of Mixed
economy countries. INDIA adopted Mixed Economy System from the
post – Independence period itself.