ECONOMIC SYSTEMS

of its economy, including

economic system the
structure of a country's
economy, including the
ownership of resources, and
how those resources are used
to satisfy people's needs and
wants
The economic system of a country is the structure
system can have positive and
the ownership of resources. An economic
and can impact the quality
negative effects on the economy of a country
try to country.
of life of the people. Economic systems vary from coun command,
systems: traditional,
Economists identify four different economic
eving the same goal:
market, and mixed. Each one is a different way of achi
the four economic systems
economic activity. The main difference among
e governments want full control of
is the level of government control. Som
their economy and full control of their
citizens. Other governments want to
give businesses and citizens some freedom to make their own choices.

Traditional Economy

seen in small, isolated

A traditional economy is most often
hunt, or
communities. Most people are farmers who grow,
d by past practices,
fish just enough to survive. They are guide
Traditional economies have
ecological knowledge, and tradition.
People meet
existed around the world for thousands of years.
their needs through their own efforts. For
example, they may
Examples of traditional
plant crops or herd animals for food.
i people of Nigeria and
economies are Inuit of Canada, the Fulan
6.12).
Chad, and the Saami of northern Europe (Figure
skills suited to
0
Advantage: People develop knowledge and
onal
survival in their local environment. FIGURE 6.12 The Saami people have a traditi
r herder from
Disadvantages: There is little interaction with other
people. economy. This woman is a reindee
of life because of northern Finland. Reindeer herding is part of
Some communities have a lower quality their economy.
a low literacy rate.
little healthcare, poor nutrition, and

Government control: None

Command Economy

t owns or controls all

In a command economy, the governmen
and make s all the economic
the resources, goods, and services,
bute to decisions
decisions. Citizens have little freedom to contri
t forces people to do
that affect their country. The governmen
man d econ omies are China,
as they are told. Examples of com
Cuba, and North Korea (Figure 6.13).
of its
.
Advantage: The government can focus all
a's push to increase
resources on one goal, such as Chin
economic development.
s made
Disadvantage: Government decisions are not alway
during the
in the best interests of the citizens. For example,
mism anag emen t led to fam ine in North
1990s, government
n peopl e died of starva tion beca use the
Korea. About 1 millio
and not accept food aid from other countries.
FIGURE 6.13 Kim Jong- un (right) runs a comm government would
support of the
economy in North Korea with the Government control: Full
army. He inherited his posit ion as supre me leader and
y
has been called a dictator. He controls the econom
because his government owns everything.
NEL

Development and Quality of Life

176 UNIT 2: Global Inequalities: Economic