Economic Development and Transition - Pearland Independent 经济发展与转型——新富邦独立.ppt

Economic Development and Transition Chapter 18 Section 4 Transitions to Free Enterprise Economic Development and Transition Objectives: * Identify some important steps in moving from a centrally planned economy towards a free market economy. * Describe the political and economic changes that have taken place in Russia in recent decades. * Describe the actions that China’s communist government has taken to introduce free market reforms into China. Economic Development and Transition Section Focus: Making the transition from a command economy to a market economy is a difficult process. The shift requires tremendous changes on the part of the government and the workers. Economic Development and Transition Most LDCs have discovered that a centrally planned economy limits development. Many communist nations are reshaping their economies. Former Soviet Union, Cuba, North Korea, and etc. They have dismantled their economies and replacing them with market-based systems. China has modified their command economy to incorporate some free market practices. Economic Development and Transition The transition to free markets and capitalism is a huge adjustment for an economy and a nation. Economic Development and Transition Moving Toward a Market Economy: One of the key elements of a command economy is that the government, not individuals, owns and controls the factors of production. The government answers the three key economic questions. First step moving from a command economy to capitalism is privatization. Economic Development and Transition Moving Toward a Market Economy: Privatization – the sale or transfer of government-owned businesses to individuals. Private ownership give the individual, not the government, the right to make decisions about what to produce and how much to produce. Ways to do this… 1. sell the business to one owner 2. sell shares in the business to interested people 3. give every citizen a voucher or certificate that