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Economic Systems and Growth What is Economy An Economic system is what a country uses to sort out the sharing and control of resources. (How a country makes and spends its money) The economy of a country answers these questions: What is produced, who should produce it and who gets what is produced. Traditional Economy An economic system based on traditions, routines and beliefs. Traditional products are often made and sold or traded at open markets People in the system are closely involved in its operation Roles in a traditional economy are passed down through family members Kenya has a traditional economy Command Economy A system based on Central control of trade and production. Government decides what goods and services are given to its people, it may even limit what jobs people can hold. Egypt is moving away from a command economy however the government still has some control over financial decisions Command economies are now found only in politically isolated countries such as Cuba and North Korea Market Economy A system that is managed by the people. It is also known as a free market system or capitalism. Market economies are based on supply and demand. Businesses control how much they produce and people control how much they consume. Market Economy- Contined An entrepreneur is a person who takes the risk of organizing and running a new business. Their work is important to an economy’s growth Morocco is moving toward becoming a market economy Mixed Economy Is based on a mixture of state and private ownership and control. Few nations have pure economic system. Many countries have a mix of command and market economies. There is a range in trade and industry freedoms in these countries South Africa and Nigeria have mixed economies. Capital Human Capital is the value of peoples work. A skilled worker is valuable to businesses and the nations. Providing education, training and healthcare to a worker is an investment in human capital. An
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