A mixed economy is an economic mix of govt commands, market, and traditional economic systems. A mixed economy in itself isn’t completely a bad thing; there are good sides to it too.
Knowing about mixed economy countries list as well as important aspects of this system can allow you to understand more about the economy of the world.
In this guide, we’ll have a look at what a mixed economy is, which countries follow this system, and both the good and the bad of it.
What Is A Mixed Economy?
Mixed economy has three parts. First of them is the rule that markets should be free without government intervention. This allows privately owned businesses to run freely without any forced command from the Government or other state parties. But there’s a catch, which is the rule of command.
The rule of command allows the Government to take control in private businesses when working with public resources or keeping the business’s monopoly under control.
If private organizations are allowed to work freely all the time, there might be unwanted issues that may arise. That’s why the Government is able to control the market.
State intervention isn’t always necessary; the markets should be allowed to run freely to allow them space for growth. That’s the rule of the traditional economic system. Regular traditional economic systems can freely work in a mixed economy. But this isn’t the case in a fixed market economy, which is non-flexible.
Countries With Mixed Economy
The following countries are examples of mixed economies. The percent of GDP spent by the Government is the total percentage of command the state has in its market. Private organizations and other economic systems manage the rest.
Hong Kong: 18.6% GDP is spent by the Government.
United States: 38.9% GDP is spent by the Government.
United Kingdom: 47.3% GDP is spent by the Government.
France: 52.8% GDP is spent by the Government.
Sweden: 52% GDP is spent by the Government.
Iceland: 57% GDP is spent by the Government.
China: 20% GDP is spent by the Government.
Russia: 34.1% GDP is spent by the Government.
Benefits Of A Mixed Economy
Let’s see what benefits a mixed economy can provide to a market.
Too much state intervention isn’t ideal for a business’s growth. If the state and the Government are always trying to control the whole portion of the market, this will be a big barrier to growth for private businesses. This is especially true for new entrepreneurs who don’t have enough knowledge of a business.
But some legal support is always helpful. For example: if a business is abusing the monopolistic nature of an industry, it’s closing rooms of growth for the other competitors. Or, someone can start selling unethical products. And if there is zero government control in these businesses, the damage is unstoppable.
For this reason, some degree of government control is helpful to ensure proper legal support for businesses and their stakeholders.
There are times when a government notices room for improvement or a need for change in an industry to ensure the overall benefit of a market surrounding the industry.
In times like these, the Government can easily take steps to develop the macroeconomy by providing policies and taking some part of the industry under its control.
For example: if there’s a need for more entrepreneurs in a specific industry, then the Government can give business loans to newer organizations to provide them some support as they start. This can have a great impact on the overall macroeconomy. The poor people can get to earn in this way by helping economic development.
In a mixed economy, the Government can check what products are coming into a country and what are being produced locally.
And then, it can check whether any product is harmful to the economy or has a bad impact on nature. And since the Government has some command over the market, it can take immediate control of that issue.
Or there might be a product that needs to sell more because of a higher production rate. In this case, the Government can reduce the retail price of it to entice consumers to buy it more.
Or in some cases, this might be an absolute opposite case too. All of this can be done under a mixed economy for the fact that the Government has a command.
As a matter of fact, if the Government Gets more command on the market, the mixed economy can make it to a reduced amount to maintain the balance of state intervention.
The Government is a large, single entity. A market is large, too, but not a single entity. It’s impossible for a government to take all the industries under its control because of the numerous smaller parts that the industries and their markets have. For this reason, dispatching control of a market into private organizations can benefit the market.
A small business has more control in itself. It has better ideas on how to provide better service and products without cutting down on the quality while keeping the cost under control.
But a government would have a hard time making all the necessary, small adjustments all the time. So it’s better to allow smaller businesses to control the market and only require state intervention when there’s a need for a government command. This is how it is possible to maintain private businesses well, easily.
Problems Of A Mixed Economy
A mixed economy isn’t free from problems. Let’s talk about a few major issues it can create in a country
Confusion Regarding Government’s Control
How much control should a government have over an economy is a matter of constant debate. Some economists prefer a larger control, while some are against the idea that a government can have a bigger command over a market. There is logic for both sides, but there’s no single best idea.
A bad state command on the market can badly influence the balance of a market, damaging its efficiency in the process. Since how much state and government control should be in a market is a matter of debate, markets can get volatile and inefficient.
None of the economic systems currently being followed in mixed economies right now are perfect in all ways. As a matter of fact, state command varies from area to area, and you can never be sure of GDP levels from the mixed economy countries list.
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