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Features of command economies

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Essay In this essay I will discuss the features of command economies such as those which used to exist in Eastern Europe before 1989 and why they wanted to change their command economies into a market economies, and what has the transition delivered. It is first necessary to make a few general points about this particular economic system. A command economy is one in which the fundamental economic questions-what, how, and for whom to produce, are answered by reference to state determined priorities rather than the interaction of supply and demand in the market place. Such systems were introduced in eastern Europe in the period from the end of the Second World War until 1989, and all of these are in the process of transition to more market orientated systems, with varying degrees of determination and success. Command systems are also to be found in China and other parts of East Asia, Cuba, and some African countries. In a command economy, the land and capital is owned by the state. Because the central ownership thought they will maximize the collective good use of that land. ...read more.


For example, competition led West Germany to develop the BMW and the Volkswagen, East Germany had a single car maker - Trabant, producing an antiquated and unreliable vehicle which sold for more second hand than it did new because of its enormous waiting list. The second failing is that there were no incentives to productivity. No rewards were given to overfilling workers. Therefore no one would do more research such as how to improve the way of production even it was not a difficult process, which can be seen from the last 20 years of Western Europe. The third problem is the wastage of resources. A planned economy needs to divert resources into planning, rather than actually producing. The number of population employed was more than the number the productions really need if they improve their technology. Another problem is the over-regulation and inflexibility. An complex and intricate plan of this detail could not be easily adjusted to take account of changing circumstances, and could not easily find outlets for initiative and ingenuity. The Soviet Union contrived to keep a planning regime for more than 70 years, but latterly they were failing to meet increasingly modest targets. ...read more.


Russia's GNP for 1999 was forecast by the World Bank at $167 billion; which would classify it with many Third World countries in terms of output per head. According to the European Commission in April 2001, all the ten eastern European candidates for admission to the EU recorded positive growth in 2000, for the first time since 1989. The average growth rate was 4%. Although Romanian inflation was still 49%, the average for the ten countries was just 12.9% and falling. Much of the growth was attributable to the candidates' success in reorientation of their trade towards the EU. In the case of Hungary the EU share of exports had reached 70%. To conclude, I would state that the mixed economy is more adaptable than command economy in the current world. However it is a mistake to assume that the command system never deliver economic success. The command economy will achieve success when the productivity of human is greatly prospered due to the rule of the history although it is hard to imagine. In the current world, the market forces in the economies are very important factors. Because workers and officers, companies, organizations need incentive to work. All of those issues are due to a higher productivity and higher standard of life. ?? ?? ?? ?? 2 ...read more.

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