Effects of the Countries of Transformation from Centrally Planned Economy to Market Based Economy
Effects of the Countries of Transformation from Centrally Planned Economy to Market Based Economy.
HELP University
Ng Li Yin
B1300613
Soo Chen Yan
B1202965
Wong Li Chean
B1202828
Centrally planned economy is an economic system in which the government makes almost all the decisions of a country’s economic activities (“Definition of 'Centrally Planned Economy '”, 2014). For instance, government takes control on what goods and services is produced and how the resources are disseminated. The purpose of centrally planned economy is to enhance the productivity and management by allowing the planners to take advantage of better information accomplished through a combination of economic resources while making decisions on the topic of investment and also the distributions of economic inputs (“Command economy”, 2014). On the other hand, a market economy is an economic system in which the consumers and businesses who take control on making the economic decisions of a country (“Definition of 'Market Economy '”, 2014). For instance, consumers and businesses decide the price of goods and services and how much to supply. However, there is little government involvement. In the late 1980s, the decline of the centrally planned economies has downgraded the living standards of the people (“Economic reforms (transition to a market-based economy)”, 2014). Hence, some of the centrally planned countries such as Poland, Hungary, and Yugoslavia intended to move towards a market economy because this is the only way to conquer the gap between these socialist economies and the western-like market economies (“Economic reforms (transition to a market-based economy)” , 2014). The transformation from a centrally planned economy to a market based economy has never been easy (“Command economy”, 2014). There is only one process of transition is considered as successful which is the People 's Republic of China (“Command economy”, 2014). On the other
HELP University
Ng Li Yin
B1300613
Soo Chen Yan
B1202965
Wong Li Chean
B1202828
Centrally planned economy is an economic system in which the government makes almost all the decisions of a country’s economic activities (“Definition of 'Centrally Planned Economy '”, 2014). For instance, government takes control on what goods and services is produced and how the resources are disseminated. The purpose of centrally planned economy is to enhance the productivity and management by allowing the planners to take advantage of better information accomplished through a combination of economic resources while making decisions on the topic of investment and also the distributions of economic inputs (“Command economy”, 2014). On the other hand, a market economy is an economic system in which the consumers and businesses who take control on making the economic decisions of a country (“Definition of 'Market Economy '”, 2014). For instance, consumers and businesses decide the price of goods and services and how much to supply. However, there is little government involvement. In the late 1980s, the decline of the centrally planned economies has downgraded the living standards of the people (“Economic reforms (transition to a market-based economy)”, 2014). Hence, some of the centrally planned countries such as Poland, Hungary, and Yugoslavia intended to move towards a market economy because this is the only way to conquer the gap between these socialist economies and the western-like market economies (“Economic reforms (transition to a market-based economy)” , 2014). The transformation from a centrally planned economy to a market based economy has never been easy (“Command economy”, 2014). There is only one process of transition is considered as successful which is the People 's Republic of China (“Command economy”, 2014). On the other
References: Amadeo.K, (2014). Market Economy. Retrieved from http://useconomy.about.com/od/US-Economy-Theory/a/Market-Economy.htm. ASIA-PACIFIC ECONOMICS Blog, (2014). Command economy pros and cons. Retrieved from http://apecsec.org/command-economy-pros-and-cons/ Centrally planned economy Command economy. (2014). Retrieved from http://www.answers.com/topic/planned-economy. European Commission. (2014). Economic reforms (transition to a market-based economy). Retrieved from https://webgate.ec.europa.eu/multisite/etc/en/content/economic-reforms-transition-market-based-economy. Investor Words, (2014). Planned Economy. Retrieved from http://www.investorwords.com/8175/planned_economy.html#ixzz34n1pNDUu. Market economy, (2014). Definition of 'Market Economy '. Retrieved from http://www.investopedia.com/terms/m/marketeconomy.asp. The fundamental economic problem. (2007). Retrieved from http://econ.economicshelp.org/2007/09/fundamental-economic-problem.html.