<< Chapter < Page Chapter >> Page >

Most economies in the real world are mixed; they combine elements of command and market (and even traditional) systems. The U.S. economy is positioned toward the market-oriented end of the spectrum. Many countries in Europe and Latin America, while primarily market-oriented, have a greater degree of government involvement in economic decisions than does the U.S. economy. China and Russia, while they are closer to having a market-oriented system now than several decades ago, remain closer to the command economy end of the spectrum. A rich resource of information about countries and their economies can be found on the Heritage Foundation’s website, as the following Clear It Up feature discusses.

What countries are considered economically free?

Who is in control of economic decisions? Are people free to do what they want and to work where they want? Are businesses free to produce when they want and what they choose, and to hire and fire as they wish? Are banks free to choose who will receive loans? Or does the government control these kinds of choices? Each year, researchers at the Heritage Foundation and the Wall Street Journal look at 50 different categories of economic freedom for countries around the world. They give each nation a score based on the extent of economic freedom in each category.

The 2015 Heritage Foundation’s Index of Economic Freedom report ranked 178 countries around the world: some examples of the most free and the least free countries are listed in [link] . Several countries were not ranked because of extreme instability that made judgments about economic freedom impossible. These countries include Afghanistan, Iraq, Syria, and Somalia.

The assigned rankings are inevitably based on estimates, yet even these rough measures can be useful for discerning trends. In 2015, 101 of the 178 included countries shifted toward greater economic freedom, although 77 of the countries shifted toward less economic freedom. In recent decades, the overall trend has been a higher level of economic freedom around the world .

(Source: The Heritage Foundation, 2015 Index of Economic Freedom, Country Rankings, http://www.heritage.org/index/ranking)
Economic freedoms, 2015
Most Economic Freedom Least Economic Freedom
1. Hong Kong 167. Timor-Leste
2. Singapore 168. Democratic Republic of Congo
3. New Zealand 169. Argentina
4. Australia 170. Republic of Congo
5. Switzerland 171. Iran
6. Canada 172. Turkmenistan
7. Chile 173. Equatorial Guinea
8. Estonia 174. Eritrea
9. Ireland 175. Zimbabwe
10. Mauritius 176. Venezuela
11. Denmark 177. Cuba
12. United States 178. North Korea

Regulations: the rules of the game

Markets and government regulations are always entangled. There is no such thing as an absolutely free market. Regulations always define the “rules of the game” in the economy. Economies that are primarily market-oriented have fewer regulations—ideally just enough to maintain an even playing field for participants. At a minimum, these laws govern matters like safeguarding private property against theft, protecting people from violence, enforcing legal contracts, preventing fraud, and collecting taxes. Conversely, even the most command-oriented economies operate using markets. How else would buying and selling occur? But the decisions of what will be produced and what prices will be charged are heavily regulated. Heavily regulated economies often have underground economies , which are markets where the buyers and sellers make transactions without the government’s approval.

Questions & Answers

The bank of canada increases
Bobby Reply
central problems for whom to produce
Gauri Reply
please clear it, what is your adject question?
how do lower interest rates affect investment
meek Reply
which capital is best and why
Sanju Reply
outline 4 reasons why public corporation are establush
Ophelia Reply
how does the foreign currency rate affect to your needs and wants?
Donna Reply
a country can not produce everything so it needs to import some of those thing and once the currency rate becomes high we can not import as much as we can
for instance let's say $1=R4 with R16 we can import more goods than when $1=R8
Difference between needs and want?
Tijani Reply
what is a price mechanism
Johnny Reply
dis Is same as market market mechanism... it is the process by Wch a market solves a problem allocating resources especially deciding how much a good shld be produced
it is the shift of the demand curve to the left....which shows that less of a commodity is demanded
Sarpong Reply
what is unemployment
what is meant by a decrease or fall in demand
Lower the demand i.e, lower the consumption
dat is a shift in demand curve
what is industrialization
Santa Reply
Industrialization is the process by which an economy is transformed from primarily agricultural to one based on the manufacturing of goods. Individual manual labor is often replaced by mechanized mass production, and craftsmen are replaced by assembly lines.
industrialisation is the period of social and economic change that transforms a human group from an agrarian society into an industry society..involving extensive reorganization of an economy for the purpose of manufacturing
What is monopoly
Nancy Reply
monopoly is market structure
monopoly is a market structure where there is only one producer or seller of a commodity
monopoly is a market where there is only one seller
And the product has no substitute
is type of market where there are only one seller with no close substitute
has no substitute because only producer of the product in market
thanks, its true
what's the summary meaning of economic
what is money as used in economics
Fri Reply
store of value ,unite of account ,
Money is any good that is widely used and accepted in transactions involving the transfer of goods and services from one person to another
money is anything that is generally accepted by the citizens of the country to carry out the transactions of good and services for example CFAF which is generally accepted by the citizens of Cameroon to carry out good and services.
money is anything which is generally accepted by each and every person in order to purchase goods and services to fulfill his/her need or requirements
money is anything dat is generally acceptable as a medium of exchange Nd settlement of debts
how those the government obtain economic objectives?
Santa Reply
how do commercial bank create credit
Santa Reply
commercial bank accept the deposit from the people and provide it to the needy person in the form of credit by keeping a part of deposit as reserve.

Get the best Principles of economics course in your pocket!

Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
Google Play and the Google Play logo are trademarks of Google Inc.

Notification Switch

Would you like to follow the 'Principles of economics' conversation and receive update notifications?