There are three major types of economic systems in the world today--market, planned and mixed. While traditional economies (where the economic system is based on traditions and customs such as hunting and farming) still exist in countries such as Haiti, Chad and Rwanda, most of the world's economic systems are considered mixed.
Market Economy
Market economies feature individuals who own and operate the means of production, and the state and national governments play a small role. The consumers and their subsequent buying decisions drive the economy. The right path for the economic development of the country is heavily based on the assumptions of the market, or supply and demand, according to Economy Watch.com. Also referred to as free enterprise or capitalist systems, market economies rely upon the state to protect the consumer while simultaneously promoting competition in the market. Countries with market economies include the United States, Japan and Great Britain.
Command/Planned Economy
A command, or planned, economy is where the government makes all major decisions for the country related to production, service, distribution and commodity prices, according to Economy Watch.com. The government owns and operates the factors of production; this type of economic system is often referred to as communism. Examples include the economies of China, Laos and Cuba. While this type of economy can result in slower reaction time to consumer needs because it is operated entirely by the government, it also allows for the use of all available resources for production development. A market economy uses available resources mainly for marketing and advertising, according to Economy Watch.
Mixed Economy
Mixed economies have elements of both planned and market economies in one cohesive system, according to Economy Watch. This system is popular in countries where neither business corporations nor the government controls the country's economic activities. There are actually no pure market or command economic systems that exist in the world today, according to Buck Investor.com and Economy Watch.com. Instead, most countries use a mixed economic system. Mixed economies are described as having government regulation in some areas and flexibility in others. According to Economy Watch, mixed economies result when a society looks to find balance when the people enjoy a wide range of social and political views.
