Today there are more than 200 countries around the world, which have a different or similar system of government. On the other hand, economic systems are different or they are administered differently from others, mostly guided by their ideologies. To get a clear idea, this article will explain what is and what types of economic systems exist in the world today?
What is an economic system?
In addition to comparing the economy with money, multinational or national firms or corporations, their structure and characteristics, actually have a more complete and general origin in a society. Economy is defined as the science that studies all aspects of production , creation of raw materials, distribution, consumption and services of a country.
An economic system is one organized form of economy in society, which implies the proper administration of resources. It is a set of rules that guide the economy in a specific area, taking into account the three largest sectors. These three sectors or types of trade are socialism, capitalism and mixed trade, with socialism and capitalism being the most influential in almost all of the world.
What are the objectives of an economic system?
As mentioned above, an economic system is a structure that allows for balanced resource management of which a geographic area has. And the clearest objectives of a trading scheme are the following aspects which we will mention below.
- Satisfy the needs of the inhabitants of a certain area with a simpler and more complex aspect.
- Analyze the importance of the quality of articles and services.
- How the operation and production of an item or product will be handled.
- Maintain a sustainable and balanced system .
- Develop a system that generates economic growth.
The three types of economic system that exist today
Once you understand what an economic system is and its goals, now is the time to mention what the three types of economics are.
The trading system based on socialism supports the defense of collective property , the definition of rules and the naming of all companies as part of the state. Prices are generally governed by legal laws that establish general control over the market and its functioning.
There are many economies that are joint or mixed in different ways, some inclined to the capitalist system and others to socialism, but not completely. So it is defined as a mixed economic system because manage the two commercial factors at the same time.
The capitalist system protects or supports private property, defends the freedom of trade for owned companies. You can set your prices in based on the law of supply and demand and competitive markets are also buoyant.
Elements of an economic system
Each economic system has a series of components, which allow it to be more orderly, among the elements it has are the following:
- Productive vectors: in this section, resources such as land, labor and necessary capital are grouped together.
- Properties and services: in this group are all the goods and services that a percentage of the nation requires to meet basic needs.
- Economic intermediaries: in this group the agents who administer this commercial system, such as companies, the State or families, intervene directly.
Economic systems based on decision making
- Trade control: it is one that is concentrated in a central authority, this is common in communist countries.
- Conventional trade: this economy is simple, decisions are generally made on the traditional basis, they are companies that depend on other large companies with greater economic power.
- Negotiation of market: this negotiation of market it is run by the capitalist population, who are generally the decision makers.
Currently in our current history it exists in many parts of the world a large space for the mixed economy , between capitalist and socialist.