An introduction, types of economy
An Introduction (Types of Economy) There are three categories of an economy based on the role of the state and government relative to the private sector and the market. There are three categories of the economy based on dependence. Classification of economic activities. The classification is done in three categories.
An Introduction The mode which studies and analyzes all the economic activities of man is called economics. The practical side of economics is the economy. An economy is a system with which the resources available in the country are exploited and new resources are created. Through the economy, an effort is made to bridge the gap between unlimited needs and limited resources so that the consumer is more satisfied, the producer gets more profit, and maximum social welfare is ensured for the society.
Importance of economy: – Economic activities of a country are related to the economy. By which he wants to achieve the highest point of development by using his resources properly. In the present situation, the importance of the economy and economic activities has increased. Earth has emerged in this era of economic liberalization as a regulatory fact of all human activities. To understand the policies of a country, it is necessary to understand the economy and economic system of that country. A strong nation cannot be imagined without a strong and capable base. The main objective of any nation is to advance the nation on the path of development and ensure the welfare of all the people while ensuring the unity, integrity, and integrity of the nation.
Types of Economy
The economy is classified on various grounds, which are as follows:
- Based on the development strategy.
- Depend on the role of the state and government.
- on the stage of development.
- basics of the nature of the dependency.
- Based on interrelationship with the rest of the world.
There are three categories of the economy based on the role of the state and government relative to the private sector and the market.
Socialist Economy: –
This economy is motivated by the purpose of establishing a socialist, society. The concept of public ownership applies to resources in such an economy. Therefore, there is more interference of state and government in such an economy. The role of demand and supply (market factors with the private sector) is negligible. A Socialist economy is called a controlled economy due to its controlling nature. China, Cuba, North Korea are examples of socialist economies.
Capitalist Economy: –
The role of demand and supply (private sector and market) factors in a capitalist economy are effective. The role of the state and government in such an economy is limited. Such an economy is based on the principle of non-interference. In a capitalist economy, where there is an emphasis on profit, the socialist economy is inspired by the concept of a welfare state.
Mixed Economy: –
In such an economy, both socialist and capitalist traits are found. India’s economy is an example of a mixed economy.
There are two categories of the economy based on the strategy of development.
Planned category: –
Economies that accept the concept of development with a systematic strategy fall into the category of the planned economy.
Non-planned category: –
An economy that does not accept the concept of planning is called a non-planned economy.
In the current global scenario, all economies fall under the category of the planned economy. There are three categories of the economy based on different stages of development.
Developed Economy: –
Where the process of industrialization started in the first and second phases of the industrial revolution and today has reached a high stage of development. Such economies fall under the category of a developed economy. America and most European countries
Economies are placed in the category of a developed economy. The service sector is more important in the GDP of developed economies and has entered the third stage of economic development.
Developing Economy: –
Such economies could not properly exploit their resources. The process of industrialization started late here. The economies of most countries that achieved colonial independence in the 1940–the 50s belong to this category. In the GDP of such an economy, the share of the agriculture sector is decreasing and the share of industrial and service sectors is increasing. These economies are in the second phase of economic development.
Least Developed Economy: –
Economies that have not yet been able to exploit their resources and are still in the initial stage of development are called Least Developed economies. Such economies depend on grants from other countries and international organizations to meet their needs. The role of the primary sector in the GDP of countries with such economies remains important.
There are three categories of the economy based on dependence-
- Self-reliant economy: – Economies that supply their needs from their production. Generally, the nature of such an economy is a closed economy.
- Dependent Economy: – Economy which fulfills its requirement not by its own production but by the grant or support of other economies.
- Interdependent Economies: – Economies in which the qualities of both self-reliant and dependent are present. Under the category of the interdependent economy. In the present scenario, most economies fall under this category.
There are two categories of the economy on the basis of interrelationships with the rest of the world.
- Closed Economy: – Economies that emphasize self-sufficiency and remain indifferent to economic activities with the rest of the world. It is called a closed economy. Before 1991, the Indian economy was largely in this category.
- Open Economy: – Such an economy promotes a competitive system and discourages protectionism. Countries with an open economy encourage economic interaction with the rest of the world. Their nature is largely controlled. After 1991, the Indian economy grew into an open economy.
Classification of Economic Activities Classification of economic activities is classified into three categories –
- Primary Sector: – Primary sector includes those economic activities which are directly dependent on the environment. The primary sector is concerned with natural resources like land, water, vegetation, and minerals. It includes those actions which are necessary to keep a human alive. Activities like agriculture, animal husbandry, fisheries, forest produce, mining, etc. fall under the primary sector
- Secondary Sector: – Secondary area includes activities in which the nature of natural resources changes and makes them valuable. Secondary verbs include production-related verbs. The second area includes three types of areas.
- Manufacturing industry
- Small and cottage industries
- Mineral industry
- Tertiary sector: – Tertiary sector is concerned with field related to service-related activities. The role of manpower in this field is important. Activities related to transport, communication, etc. are included under this, the reason being that most of the services are performed by professionally trained experts and consultants to skilled workers. Development economists have termed tertiary activities as a service industry.