• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Features of command economies

Extracts from this document...

Introduction

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.

Middle

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.

Conclusion

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Economics questions - economies of scale.

    When a bank takes over another bank, both companies are in the banking industry. b) Vertical integration, occurs when the firms joining together are in the same industry but at different stages of production. There are three types of vertical integration: The first one is the Forward Vertical Integration,

  2. Outline the main features of a market economy and compare it to a Command ...

    The interactions between the producers' supply and the consumers' demand determine the price. If the supply of a good is low and the demand of the good is high the price of that good will also be high as the entrepreneur will be able to see Another important feature of the free-market economy is private property.

  1. Highlight the features of a command economy and discuss the merits.

    For example, it may cost $1.00 to produce a loaf of bread, but the price may be set at $.25 to ensure consumers are able to afford the needed supplies.

  2. Marketing Plan: Handywares Plc.

    Joint ventures often get tax deductions and different kinds of government subsidies. It also improves the possibility to have a good after-sales service. The Chinese are very eager to form joint ventures, Handywares should take advantage of this opportunity. The main problem with setting up business in China is the laws on manufacturing.

  1. Describe the main economic problem which may arise in transition economies

    All the countries in the transition process found unemployment as one of the heaviest costs they had to bear. The countries worst affected by the GDP fall have seen a rise in their informal sectors. For example it can be easily seen from table 44.3 that in 1988 countries like

  2. Scarcity and Unlimited Wants.

    In this figure a subsidy has been given to the firm. This has the effect of making firms willing to supply more at each price and so shifts the supply curve downwards. The shift is equivalent to the value of the subsidy.

  1. The Quest for Optimal Asset Allocation Strategies in Integrating Europe.

    I would like to investigate whether this new structure of top-down asset allocation according to industry correlations is the optimal strategy for an investor with a mean-variance perspective. The research question of this paper therefore is: What are the implications of the process of economic and monetary integration in the

  2. Global Business Plan.

    increase in profit as the market learns that we are in the marketplace. F. We also expect to get over 50% of the market share in three to five years. SWOTT Analysis In late 1978 the Chinese leadership began moving the economy from a sluggish, inefficient, Soviet-style centrally planned economy to a more market-oriented system.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work