Mixed economy.docxVIP

PAGE1 / NUMPAGES10 1.0 Introduction Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies (According to Schiller. Bradley 2010). Most mixed economies can be described as market economies with strong regulatory oversight, and many mixed economies feature a variety of government-run enterprises or government provision of public goods. Malaysia is a democratic country with excellent economic system. Malaysia also is a leading country in economic terms and being an example for the economy system we are using. In Malaysia, government use mixed economy system. This economy system is the leading type of economic system that is used in most of the countries such as United States. Mixed economy system includes a mixture of capitalism and socialism. It combines private economic freedom, centralized economic planning and government regulation. Government plays major role in economic growth as well as distribution of wealth. For example, Malaysia government collects tax and provides subsidies at the same time for the public. The basic idea of the mixed economy is that the means of production are mainly under private ownership; that markets remain the dominant form of economic coordination; and that profit-seeking enterprises and the accumulation of capital remain the fundamental driving force behind economic activity. However, unlike a free-market economy, the government would wield considerable indirect influence over the economy through fiscal and monetary policies designed to counteract economic downturns and capitalisms tendency toward financial crises and unemployment, along with playing a role in interventions that promote social welfare (According to Pollin, 2006). Subsequently, some mixed economies have expanded in scope to include a role for indicative economic planning and/or large public enterprise sectors. 2.0 Mixed economy in Malaysia Malaysia is