Market and Command Economies
The Netherlands and Cuba, Two Contrasting Economic SystemsThe world economy is made of several different forms of economic systems. Since the fall of communism in Eastern Europe, market economies are becoming more prevalent in the World. While many of the countries having a command form of economic system are making the transformation to market forms of economic systems, few countries are resisting the pressure to make the transformation and continue to operate under the command form of economy. The following paragraphs will explain the distribution of income, production, and the role of government in Netherlands' market economy and Cuba's command economy.Overview of Market and Command Economies A market economy is one in which resources are privately owned and controlled. The market governs decision-making in this type of economy. This economic environment encourages competition among businesses by allowing sellers the freedom to increase or decrease prices according to changing market conditions (Market Economy, n.d.). The market is very responsive to the needs and wants of consumers. In this type of economy, businesses operate to make a profit. A command economy is one in which resources are owned and controlled by the
Productivity Productivity in a market economy is directly related to the dependence of production on individual profit motives. However, after the fall of communism in Russia and US economic blockade, Cuba has experienced a decline in many areas of productivity and has experienced the opposite. Retrieved March 8, 2004 from the World Wide Web: http://alpha. There are approximately 3,600 state owned companies that operate in Cuba (Cameron, 2003). Because of the increases in the technology (communications, computer, and electronic equipment) sector, the Dutch are experiencing a growth in productivity outputs. In order to distribute income, the Netherlands has developed various tax programs, social security. In the market economy, the Netherlands economy thrives because of increased productivity and decreased government involvement. This governmental department offers subsidies that are aimed at strengthening the competitive edge of those industries that qualify to receive them. The labor market and competition in the Netherlands is projected to tighten and will force firms to increase their productivity (van der Wiel, 2003). edu/divecon/econ/trumbull/china/econroles.
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