LATIN AMERICAN ECONOMICS Three Basic Types of Economic Systems

Traditional Customs and habits of the past are used to decide what and how goods will be produced, distributed and consumed Jobs are handed down from generation to generation. Farming, hunting and gathering, and cattle herding are often part of this kind of economy.  

Traditional Each person in this kind of society knows early in life what their role in the group will be. This kind of economy can be found in some native cultures in the Amazon rain forest in Venezuela and Brazil.

Command Government planning groups make the basic economic decisions A problem with this kind of system is trying to predict exactly what will be needed, and in what quantity The government determines wages and sets prices. Government tell how much of what product should be produced by setting quotas Farms and businesses are usually owned and run by the government.

Command Too much of one product and not enough of another is common in this kind of system Cuba has this kind of economy Food prices and the costs of housing and clothing are kept low while luxury items such as TV’s and computers are usually very expensive. Health care and education are usually provided by the government at no cost

Market Decisions are guided by changes in prices that occur between individual buyers and sellers Other names for this kind of system are free enterprise, capitalism, and laissez-faire. If companies in this kind of system don’t manage money well, it may go out of businesses causing workers to lose their jobs and incomes.

Market Consumers can usually find the goods they want and workers can earn as much as they are able. Businesses and farms are generally owned by individuals or corporations and each business or farm decides what it wants to produce. Businesses are free to find new ways to make better products and charge lower prices. Mexico has this kind of economy.