I N T E R N A T I O N A L B U S I N E S S ECONOMI C SYSTEMS Group Ⅲ

Agenda ECONOMI C SYSTEMS

Ⅰ. TRADITIONAL ECONOMY -Relies on habit, custom or ritual to decide what to produce, how to produce it and to whom to distribute. -The country’s economy and way of life are passed down from generation to generation. -Most of the economic decisions are made based on custom and on the habit of how such decisions were made in the past. -Some parts of Asia, Africa, South America and the Middle East have traditional economies.

 TRADITIONAL ECONOMY’s CHARACTERISTICS 1. Traditional economies are often based on one or a few of agriculture, hunting, fishing, and gathering.

 TRADITIONAL ECONOMY’s CHARACTERISTICS 2. Barter and trade is often used in place of money.

 TRADITIONAL ECONOMY’s CHARACTERISTICS 3. Rarely a surplus produced and leftover.

 TRADITIONAL ECONOMY’s CHARACTERISTICS 4. live in families or tribes.

 TRADITIONAL ECONOMY’s CHARACTERISTICS 5. Technology is not used. 6. Men and women typically have different roles Example: Hunter / gatherer 7. May follow herds of animals

Ⅱ. CENTRALLY PLANNED ECONOMY aka COMMAND ECONOMY Is a system in which a nation’s land, factories, and other economic resources are owned by the government. Countries having command economies: Cuba, North Korea and Former USSR(Union of Soviet Socialist Republic)

► COMMAND ECONOMY’s CHARACTERISTICS 1.The government is in control of the pricing of goods and services.

► COMMAND ECONOMY’s CHARACTERISTICS 2.The government makes all decisions for finances in the country such as hourly rate of pay for workers. The government may even assign people the jobs.

► COMMAND ECONOMY’s CHARACTERISTICS 3.Since hourly rate of pay is regulated, also tending to be just enough to survive, people will tend to try and break the rules like selling stuff on the black market to make more money.

► COMMAND ECONOMY’s CHARACTERISTICS 4.The state has absolute power over all resources.

► COMMAND ECONOMY’s CHARACTERISTICS 5. People in power, such as politicians, give orders to buyers, sellers, and investors.

► COMMAND ECONOMY’s CHARACTERISTICS 6. Firms that produce goods and services in a command economic system are run by the government and are called state enterprises.

► COMMAND ECONOMY’s CHARACTERISTICS 7.Little individual freedom 8.No competition between businesses 9.Businesses are not run to create a profit 10.Consumers have few choices.

Ⅲ. MARKET ECONOMY Is an economy that allows goods and services to be traded freely on an open market. Canada and the United States are examples of contemporary market economies. From International Business book by John D.Daniels, Lee H.Radebaugh, Danield P.Sullivan ( D184I) Chapter 4

 MARKET ECONOMY’s CHARACTERISTICS 1.Private Property -Most good and services are privately-owned. 2.Freedom choice -Owners are free to produce, sell and purchase goods and services in a competitive market. 3. No government intervention ( laissez-faire system )

4.The consumer is king of the market 5.Competition 6.Voluntary Exchange -Both buyers and sellers must feel a benefit.  MARKET ECONOMY’s CHARACTERISTICS

Ⅳ. MIXED ECONOMY Combination of MARKET and COMMAND ECONOMIES. Decisions made by individualsDecisions made by central government -The government owns key factors of production, yet consumers ad private producers still influence price and quantity. Counties having MIXED ECONOMY including Japan, South Korea, France, India,…

 MIXED ECONOMY’s CHARACTERISTICS MARKET ECONOMY 1.it protects private property 2.it allows the free market and the laws of supply and demand to determine prices 3.it is driven by the motivation of the self-interest of individuals. COMMAND ECONOMY 1. It allows the federal government to safeguard its people and its market. 2.The government has a large role in the military, international trade and national transportation.military

Website References mers+have+few+choices&source=bl&ots=jBPs0aPoWd&sig=ACfU3U20yC2djcRBHePqqdlFDWnja8Rm6A&hl=en&sa=X&ve d=2ahUKEwjk6OfboaPjAhWJPY8KHc- ED18Q6AEwEHoECAkQAQ#v=onepage&q=why%20in%20the%20command%20economy%20consumers%20have%20few %20choices&f=false