Economic systems attempt to allocate APL Vietnam’s resources effectively

When people begin to buy and sell their products, economy was born, however, come with that there are many problems happen, so it’s time to set up a system to solve these problems in the effective way. And there are three types system that can help to solve problems; they are free market economies, command economies and mixed economies.

• Free market economies

In free economies system, it’s just like its name; it’s free so the resources are allocated through the interaction of free and self-directed market forces. In this system, what the products should be produced depend on the customers, how to produce is depend on producers and who will get the products will base on the purchasing power of customers.

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• Command economies

In this system, command economies mean the economies will be under the control of the Government. At this time, the scarce resources will be allocated by the Government, everything will be decided by the Government, what to produce and for whom to produce will be determined by Government preferences and how to produce will be determined by government and their employees.

• Mixed economies

Mixed economies system has the distinct private sector as well as public sector, most the decisions are made by the Government with the market orientation. In this system, what to produce will be determined partly by consumers preferences and partly by Government, how to produce will be determined half by producers and half by Government and for whom to produce is determined half by purchasing power and half by Government preferences.

(sources: economicsonline.co.uk[5/7/2013])

As you can see, the main differences of three systems above are about what to produce, how to produce and for whom to produce. These three things are the factors that make these three systems become distinction to each other.

Now, in my opinion, the UK is now using open economy system, to know about this clearly, we should know what the open economy system is. Open economy is mostly free from trade barriers and where exports and import for a large percentage of GDP. No economy is surely 100% total open or closed in term of trade restrictions. Degree of openness of an economy determines a government’s freedom to pursue economic policies of its choice, in term of the percentage of the GDP dependent of foreign trade the UK is more open economy than the US.