2. Some have argued that the 1980s was a decade in which the international economy grew...

2. Some have argued that the 1980s was a decade in which the international economy grew in importance, with special relevance for the formerly planned socialist economic systems. How have the contours of the international economy changed, and how will the formerly planned socialist systems be integrated into the new world order? write 1/2 page.

Expert Solution

Introduction

While, there are numerous countries across the globe and all have their own individual choice on how to manage their economies, there generally exists 3 main ways in which this can be done.

The three types of economies, namely are Socialist Economies, Capitalist Economies and Mixed Economies.

In a Socialist Economy, all Central decisions on what goods and services would be produced are undertaken by the government themselves. This means that the central decisions as to what goods and services would be made, who it would be made for and in what quantity it would be made are all decided by the government. Further, such economies do not have market-based regulations for setting the price and have only essential products and services running in the country.

On the contrary, a market-based economy is one in which the forces of demand and supply help in setting the price of goods and deciding what goods and their quantity would be produced in the economy. The government in these countries is limited to administration and policy setting and does not intervene in the markets.

Mixed economies on the other hand are ones in which both characteristics of Market as well as socialist economies apply. This means that some sectors are reserved for the government while others allow for easier access to market-based economics.

Case Specifics

The 1980's is seen as the pioneer of change in the world. Economies which were previously Centrally Planned or Socialist in their approach, faced tough criticism as well as local outrage as they were growing at a much slower rate, and the demand and supply of goods in these countries was extremely limited which had a negative impact on the growth rate as well as the quality of life of people.

Further, such countries faced tough competition and their products would not sell in the international markets due to higher taxes imposed on them. These countries include the likes of China and India among others which were managed by the government only.

Over time, countries began realizing the short comings of this policy and began expanding their countries at large, which allowed them to increase the market accessibility.

The emergence of Multi-National Corporations and these countries becoming manufacturing and outsourcing giants can be credited to the fact that they embraced change, implemented a mixed economy and broke the shackles of government control over each and every industry which they had.

The 2-digit growth rate of these countries can be attributed to the simple fact that they had ample opportunity of development and the economy grew with the world than against it.

Most countries today follow this model, and it has resulted in minimum tariffs and easier mobility of goods and services across all major economies.

Please feel free to ask your doubts in the comments section.

Rahul Sunny answered 9 months ago

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