I. Information for study. Прочтите следующую информацию и запишите и запишите на полях основные термины, связанные с тематикой текста

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Прочтите следующую информацию и запишите и запишите на полях основные термины, связанные с тематикой текста.

PLANNED ECNOMIES

Until the late 1980s and early 1990s many Eastern European countries such as Romania, Poland and Russia could be described as PLANNED or COMMAND ECONOMIES. Today, examples might include Cuba and North Korea. Government has a vital role in a planned economy. It plans, organizes and co-ordinates the hole production process. This is unlike a market economy, where planning and organizing is carried out by firms. Another difference is that resources in planned economies belong to the state. Individuals are not permitted to own property, land and other non-labour means of production.

What to produce. This decision is made by government planners. They decide the type and mix of goods and services to be produced. Planners make assumptions about consumers' needs. For example, they decide how many cars, how much milk, how many shirts and how much meat should be produced. Planners then tell producers, such as farms and factories, exactly what to produce.

How to produce.Government also tells producers how to produce. Input-output analysis is often used to make plans. For example, with a given level of tehnology, the state may know the land, labour, tractors and fertilizer (inputs) needed to make 1 million tones of wheat (the output). If an area needs 20 million tones, it is possible to work out the inputs needed. A complex table is drawn up which helps planners calculate the resources needed to meat the various output targets. Plans are often for 5,10 or 15 years.

How are good and services allocated? Goods and services are distributed to consumers through state outlets. People purchase goods and services with money they earn. Prices are set by the planners and cannot change without state instruction. Sometimes there are restrictions on the amount of particular goods and services which can be bought by any one individual, cars for example. Some goods and services, like education and health care, are provided free by the state.

MIXED ECONOMIES

In reality, no country has an economy which is entirely planned or free market. Most economic systems in the world have elements of each system.

They are known as MIXED ECONOMIES. In mixed economies some resources are allocated by the government and the rest by the market system. All Western European countries have mixed economies. The public sector in mixed economies is responsible for the supply of public goods and merit goods. Decisions regarding resource allocation in the public sector are made by central or local government. In the private sector production decisions are made by firms in response to the demands of consumers.

In the public sector, public goods and merit goods are provided free when used and are paid for by taxes. Examples might be roads, health care and street lighting. In mixed economies the state usually provides a minimum standard of living for those unable to work. In the UK the Welfare State provides benefits, such as unemployment benefit and sickness benefit. In the public sector the state will own a significant proportion of production factors.

In the private sector individuals are also allowed to own the means of production. Businesses are set up by individuals to supply a wide variety of goods and services. Competition exists between these firms. As a result, there will tend to be choice and variety. One of the roles of the government is to ensure that there is fair competition in private sector. All private sector goods and services are allocated as in the market system described earlier.

What should be the 'degree of mixing' in this type of economy? The government will decide how much business activity there will be in the private sector and how much in the public sector. Some countries, like Sweden, allow the government to play a major role in the supply of goods and services than others, like the UK. For example, in Sweden the government spends around 60 per cent of national income, whilst in the UK the government spends around 40 per cent. In countries where the government plays an important economic role, social provision will tend to be greater, taxes higher and the distribution of wealth and income more equal. In countries where the private sector plays the most important economic role, social provision will tend to be lower with fewer free goods and services at the point of sale. Also, taxes will be lower and the distribution of wealth and income less equal. For example, in the last decade, income tax rates have fallen in the UK and fewer services have been supplied by the state. The distribution of income has changed in favour of the ' wealthy ' during this time.

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