1. Types of Economies
Developed
economy
Developing
economy

2. Types of economic systems
CAPITALISTIC
SOCIALISTIC
MIXED

3. CAPITALISTIC
ECONOMY

4. COMPARISON
CAPITALISTIC ECONOMY
 PRIVATE PROPERTY
 RIGHT TO INHERITANCE
 FREEDOM OF ENTERPRISE
 FREEDOM OF CHOICE FOR
CONSUMERS
 PRICE MECHANISM
 PROFIT MOTIVE
 SELF INTEREST
 LAISSEZ FAIRE STATE
SOCIALISTIC ECONOMY
 SOCIALISTIC OWNERSHIP
OF RESOURCES
 ECONOMIC PLANNING
 SOCIAL WELFARE AS A
MOTIVATING FORCE
 ECONOMIC EQUALITIES
 CLASSLESS SOCIETY
 ELIMINATION OF
COMPETITON

5. MERITS

6. • SPIRIT OF ENTERPRISE
• INCENTIVE FOR TECHNOLOGICAL
PROGRESS
• EFFICIENT USE OF RESOURCES
• INCENTIVE FOR CAPITAL FORMATION
• NEW CONSUMER GOODS

7. • FLEXIBILTY AND ADAPTABILITY
• AUTOMATIC WORKING
• ECONOMIC FREEDOM
• INCREASE IN PRODUCTION AND
STANDARD OF LIVING
• EXPANSION OF INTERNATIONAL TRADE

8. DEMERITS

9. • INEQUALITIES OF INCOME AND WEALTH
• CLASS STRUGGLE
• ECONOMIC INSTABILITY
• MISALLOCATION OF RESOURCES

10. • WASTES OF CAPITALISTIC PRODUCTION
• EMERGENCE OF MONOPOLY POWER
• NEGLECTION OF SOCIAL WELFARE
• DOMINATION OF ECONOMIC VALUES

11. SOCIALISTIC
ECONOMY

12. MIXED ECONOMY
 CO EXISTENCE OF PUBLIC AND PRIVATE
SECTORS
 CO EXISTENCE OF CAPITALISTIC AND
SOCIALISTIC FEATURES
 ECONOMIC PLANNING
 PROMOTION OF SOCIAL WELFARE
 PRICE MECHANISM
 PROFIT MOTIVE
 PRESERVATION OF FREEDOM
 REGULATION AND CONTROL OF
PRIVATE SECTOR

13. MERITS

14. • BETTER ALLOCATION OF RESOURCES
• FULLER UTILISATION OF RESOURCES
• ELIMINATION OF ECONOMIC INSTABILITY
• EQUITABLE DISTRIBUTION OF INCOME
• ELIMINATION OF CLASS STRUGGLE

15. • PROVISION OF SOCIAL SECURITY
• INCREASE IN PRODUCTIVE EFFICIENCY
• RAPID ECONOMIC GROWTH
• PRODUCTION OF MORE USEFUL
GOODS

16. DEMERITS

17. • DIFFICULTIES INVOLVED IN RATIONAL
ALLOCATION OF RESOURCES
• LOSS OF EFFICIENCY
• LOSS OF INCENTIVES

18. • LOSS OF CONSUMERS’ SOVEREIGNITY
• LOSS OF FREEDOM
• CONCENTRATION OF ECONOMIC AND
POLITICAL POWER
• LOOPHOLES IN THE PLANNING PROCESS

19. MIXED
ECONOMY

20. MERITS

21. • PROPER ALLOCATION OF RESOURCES
• ECONOMIC STABILITY
• ADVANTAGES OF THE MARKET SYSTEM
• RAPID ECONOMIC DEVELOPMENT
• CHECK ON CONCENTRATION OF ECONOMIC
POWER
• ECONOMIC AND POLITICAL FREEDOM

22. DEMERITS

23. • CONFLICT BETWEEN THE PUBLIC AND
PRIVATE SECTORS
• SHORT-LIVED NATURE
• INEFFICIENT OPERATION
• POOR PERFORMANCE OF THE PUBLIC
SECTORS
• EXCESSIVE REGULATIONS