Different types of economy: basic information

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:41

The economic activity of different states has a lot of differences. In many ways, it depends on the state system, for example, in the Soviet Union private property was prohibited, and for running your own business you could simply be put behind bars. Different types of economy imply its division into several types, such as market, planned and mixed type. Each option has its own advantages over the others.

The main types of economy are often already divided into smaller categories. But in each of them there is illegal financial activity. Some economies have fewer dark sides, while others are so tainted with corruption that they will eventually collapse. Different types of shadow economy have a unique impact on all financial activities of the state. Some of them are in a semi-legal position and even, one might say, do not violate, but circumvent the law. Others, such as the arms or drug trade, cause severe damage to the country (both financially and socially). Illegal activities can develop in any, even in the most developed, state. The desire to hide from taxes and not give away part of their profits is inherent in many. It is not necessary that inonly an entrepreneur is guilty of violating the law, hiding part of the profit, perhaps the country's tax burden is too heavy, and in an effort to save his business, a person has to go to the shadow side of the financial apparatus.

Planned financial policy of the state can be especially distinguished from all types. It is unique in that the rest of the economy has not yet undergone its main crisis. And the heyday and collapse of planning financial activities can be seen in the example of the USSR. The first stages of the formation of the young republic required strict control over all financial activities of the country. The post-industrialization, war, and post-war reconstruction period also required government intervention.

It was in the 50s of the last century that the peak of the power of the Soviet financial system fell. Restoration work has been completed, and enterprises could already start working precisely for those regions with which it is beneficial for them to cooperate. For peacetime, tight control over their activities was no longer so necessary, but the government continued to closely monitor every enterprise in the country. Which later led first to stagnation, and then to a crisis that led to the collapse of the entire system.

In the modern world, we can observe the coming new economic crisis, which will show all the weaknesses of market relations. Most of the developed countries of Europe now have to invest huge amounts of money in the economies of other countries, becausea local financial crisis in Greece or Spain can develop into a global one.

The most adaptable of all types of species turned out to be a mixed economy. China is a prime example of this. Its economy drew the best of each type. The PRC provides cheap labor, which attracts various types of firms from the West. The Chinese economy combines both market and planning. The state clearly monitors the heavy industrial and military complexes of the country, but does not prevent the inflow of foreign capital.