There are four most important types in the economic system.
The most conventional and ancient types of economies in the world are the traditional economic system. Large portions of the world’s financial ecosystem still follow traditional financial system. These areas are rural, second world or third world, and closely united to the land, normally through farming. In this type of economic system, a surplus would be unusual. Every member of a traditional economy has a specific and well-pronounced role, and this society intends to be very close-knit and socially happy. However, they have limited access to technology and advanced medicine.
In the command economic system, a large part of the financial system is controlled by a central power. As in the USSR most decisions be made by the central govt. This type of economy is the core of the communist philosophy.
Since the govt. is such an important feature of the economy, it is often involved in everything starting from planning and ending in redistribution resources. The command economy is able to create a developed supply of its resources, and the rewards. This capability also means that the govt. usually owns all the important industries like utilities, aviation, and railroad.
In a free enterprise, companies and households act in self-interest to see however resources get allotted, what merchandise get created and World Health Organization buys the products. this is often opposite to however a command economy works, wherever the central government gets to stay the profits.
There is no government intervention in an exceedingly pure free enterprise (“laissez-faire“). However, no actually free enterprise exists within the world. for instance, whereas America may be a capitalist nation, our government still regulates (or tries to control) truthful trade, government programs, honest business, monopolies, etc.
In this form of economy, there’s a separation of the govt. and also the market. This separation prevents the govt. from turning into too powerful and keeps their interests aligned thereupon of the markets.
Historically, Hong Kong is taken into account AN example of a free-market society.
An economic system could be a combination of various forms of economic systems. This national economy could be a cross between an economy and command economy. within the commonest forms of mixed economies, the market is a lot of or less freed from government possession apart from some key areas like transportation or sensitive industries like defense and railroad.
However, the govt is additionally sometimes concerned within the regulation of personal businesses. the thought behind an economic system was to use the simplest of each world – incorporate policies that area unit socialist and capitalist.
To a particular extent, most countries have a mixed national economy. as an example, India and France area unit mixed economies.