Globalization-The Different Type Of Global Economic Systems

September 27th, 2008 Comments off
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Globalization-Global Economic Systems

For a firm to go global, it is imperative to study and understand the geography, economic development, market characteristics culture, and politics of the countries in which it wants to expand.

 

To understand global economics, we need to know that the economic systems in the world can be classified into three main types:

 

Centrally Planned Economy:

  • A system where production factors are owned and controlled by the government.
  • The government is responsible for all decisions related to the economy.

Mixed Planned Economy:

  • A system where production factors are equally owned by both the private sector and the government.
  • The government tends to control economic sectors that are considered crucial to national security and long-term stability.

Market Economy:

  • A system where the majority of production factors are privately owned.
  • Most of the economic decisions are determined by demand and supply in the market.

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