Types of Economies

Developed

economy

Developing

economy

Types of economic systems

CAPITALISTICSOCIALISTIC

MIXED

CAPITALISTIC ECONOMY

CAPITALISTIC ECONOMY SOCIALISTIC ECONOMY PRIVATE PROPERTY RIGHT TO

INHERITANCE FREEDOM OF

ENTERPRISE FREEDOM OF CHOICE

FOR CONSUMERS PRICE MECHANISM PROFIT MOTIVE SELF INTEREST LAISSEZ FAIRE STATE

SOCIALISTIC OWNERSHIP OF RESOURCES

ECONOMIC PLANNING SOCIAL WELFARE AS A

MOTIVATING FORCE ECONOMIC

EQUALITIES CLASSLESS SOCIETY ELIMINATION OF

COMPETITON

COMPARISON

MERITS

• SPIRIT OF ENTERPRISE

• INCENTIVE FOR TECHNOLOGICAL PROGRESS

• EFFICIENT USE OF RESOURCES

• INCENTIVE FOR CAPITAL FORMATION

• NEW CONSUMER GOODS

• FLEXIBILTY AND ADAPTABILITY

• AUTOMATIC WORKING

• ECONOMIC FREEDOM

• INCREASE IN PRODUCTION AND STANDARD OF LIVING

• EXPANSION OF INTERNATIONAL TRADE

DEMERITS

• INEQUALITIES OF INCOME AND WEALTH

• CLASS STRUGGLE

• ECONOMIC INSTABILITY

• MISALLOCATION OF RESOURCES

• WASTES OF CAPITALISTIC PRODUCTION

• EMERGENCE OF MONOPOLY POWER

• NEGLECTION OF SOCIAL WELFARE

• DOMINATION OF ECONOMIC VALUES

SOCIALISTIC ECONOMY

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

MERITS

• BETTER ALLOCATION OF RESOURCES

• FULLER UTILISATION OF RESOURCES

• ELIMINATION OF ECONOMIC INSTABILITY

• EQUITABLE DISTRIBUTION OF INCOME

• ELIMINATION OF CLASS STRUGGLE

• PROVISION OF SOCIAL SECURITY

• INCREASE IN PRODUCTIVE EFFICIENCY

• RAPID ECONOMIC GROWTH

• PRODUCTION OF MORE USEFUL GOODS

DEMERITS

• DIFFICULTIES INVOLVED IN RATIONAL ALLOCATION OF RESOURCES

• LOSS OF EFFICIENCY

• LOSS OF INCENTIVES

• LOSS OF CONSUMERS’ SOVEREIGNITY

• LOSS OF FREEDOM

• CONCENTRATION OF ECONOMIC AND POLITICAL POWER

• LOOPHOLES IN THE PLANNING PROCESS

MIXED ECONOMY

MERITS

• PROPER ALLOCATION OF RESOURCES

• ECONOMIC STABILITY

• ADVANTAGES OF THE MARKET SYSTEM

• RAPID ECONOMIC DEVELOPMENT

• CHECK ON CONCENTRATION OF ECONOMIC POWER

• ECONOMIC AND POLITICAL FREEDOM

DEMERITS

• CONFLICT BETWEEN THE PUBLIC AND PRIVATE SECTORS

• SHORT-LIVED NATURE

• INEFFICIENT OPERATION

• POOR PERFORMANCE OF THE PUBLIC SECTORS

• EXCESSIVE REGULATIONS