Discuss and describe the three economic systems In your opin

Discuss and describe the three economic systems. In your opinion, which economic system is the most common and why? How would you use this knowledge as a global leader?

Solution

The three kind of economic systems are:-

1) Market based economy: In this kind of economic system, the consumer decides the products that needs to be produced and the quantities in which they needs to be produced. The price is dependent on the market forces of demand and supply. Modern economies such as USA and UK are example of market driven economy.

2) Centrally controlled economy: Communist economies of erstwhile USSR and pre-liberalisation China are an example of centrally controlled economy. In this type of economy, the government decides the products and their quantities to be manufactured. It also set the prices at which these products would be sold.

3) Traditional economy: A traditional economy like Bhutan produces and consumes products which have been traditionally been manufactured or produced in the country. It has got little interaction with the outside world and is not integrated with the global economic network.

The most common type of economic system is the market based economy and most of the developed economies and the emerging economies including China have adopted some form of the market driven economic system. This is essential for a global leader to understand in order to decide which markets to target and under what policy regime, the products of an organization can be sold and the price level at which can possibly be sold. It helps in diversification of customer base and proper targeting.