The Four Types Of Economic Systems In The Modern World

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1. Introduction The process of distribution of resources, trade goods and services performed by countries and governments are referred to as Economic Systems (Umar Farooq 2009) The economy plays a significant role worldwide as it relates to the balancing of political power, fighting for control, and determining the quality of life of the people affected. It is therefore vital to have an understanding of how the various economies work, and the way an economy works is dependent on the type of economic system it uses. Four primary economic systems have been identified in the world, each with its very unique qualities. The four types are: traditional, market, command and mixed economic systems. The purpose of this report is to discuss and shed more light into these economic systems and the way they function, and also where they are practiced in the modern world. 1.1 Traditional Economic System This is the oldest of the economic systems in the world, and may be considered primitive. It is an economy defined by the barter system. Economies that practice this system still manufacture goods and services that reflect their traditions and customs. In other word, the goods and services are determined by the livelihood of people (slide shared, 2011). The advantage of this system is that people work together in the production of goods and services, which promotes harmony and equality among the people Areas of the world that still practice this system tend to be rural or third-world and
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