Market Economy The Majority Of Nations Resources example essay topic

Economic System country's economic system consists of the structure and processes that it uses to allocate it's resources and conduct it's commercial activities. Types of Economic Systems- Centrally planned economy - Mixed economy - Market economy Centrally planned economy System in which a nation's resources are owned by the government. Origins: the ideology that the welfare of the group is more important than individual well being. (Karl Marx). Decline: In the 80's nations began to dismantle communist central planning in favor of market based economy. Failures -economic value, Provide incentives, Achieve rapid growth, Satisfy Consumer needs.

Mixed economy Economic system in which resources are more equally divide between private and government ownership. Origins: the idea that a successful system must be not only efficient and innovative but should also protect society. Decline: mixed economies are converting to market system. (Privatization). Market Economy The majority of nations resources are privately owned. Economic decisions are determined by supply and demand. o Origins: the belief that individual concerns should be placed above group concerns. o Features: free choice, free enterprise and price flexibility. o Governments role: enforcing antitrust laws, preserving property rights, providing a stable fiscal and monetary environment and preserving political stability.

Development of nations The economic development is a measure of gauging the economic well being of one nation's people as compared with that of another nation's people. National development indicators: - national production- purchasing power parity - human development National Production Gross national product: value of all goods and services produced by country during a one year period, including income generated by both domestic and international activities. Gross domestic product: value of all goods and services produced by a country's domestic economy over one year period. GDP or GNP per capita: nation's GDP or GNP divided by it's population. Purchasing Power Parity Purchasing power: the value of all goods and services that can be purchased with one unit of a country's currency. Purchasing power parity: is the relative ability of two countries' currencies to buy the same "basket" of goods in those two countries.

Human Development Human development index: The measure of the extent to which a peoples needs (healthy life, education, decent standard of living) are satisfied and the extent to which this needs are addressed equally across a nation's entire population. Classifying countries Developed: highly industrialized and efficient countries that have a high quality of life. -USA, France, Italy, Canada... Newly industrialized: recently increased the portion of it's national production and exports from industrial operations (emerging markets: developed + newly industrialized). -Chile, Indonesia, Poland...

Developing: nations with the poorest infrastructure and lowest personal incomes. -African Countries. Economic transition Process by which a nation changes it's fundamental economic organization and creates new free-market institutions. Reform measures to transition 5 measures: - development of social welfare - removal of trade and investment barriers- macroeconomic stabilization - Liberalization of activities- legalization of private enterprises and privatization of state owned Obstacles to Transition: - Lack of managerial expertise- Shortage of capital - Cultural Differences- Environmental Degradation International Business John J. Wild.