Saturday, October 8, 2011

4 Factors Affecting Economic Systems

Posted by Benjamin Atuma at 5:51 AM

The three economic sytems, capitalism, communism, and socialism have been considered, some what succinctly.
 The associated defects of capitalism,communism, and socialism were described.

A number of factors affect the economic system in any given economy.  These factors include the following:

1. The Historical Background of the People: This factor pertains to the historical antecedents of the people of a given region or country in terms of their origins, ethics, norms and values as well as their customs and traditions.  Any economic system that remarkably impinges on these basic beliefs is very likely to be resisted.  For example, the Nigerian people as a result of their circumstances of    colonialism, among others, have imbibed, nurtured, and sustained the mindset that one’s position in life is a function of one’s own energy, courage and resourcefulness. That is, one’s level of entrepreneurialism.  Based on this economic philosophy, successful businesspeople are regarded highly in their communities.  As a result, any economic system that will negate or undermine this    economic thinking will be   highly rejected by the citizens.

2. The Extent of Wealth and Natural Resources in an Economy:  Another factor affecting economic systems is the level of wealth and natural resources in a given economy.  Nations rich in timber, mineral deposits, and fertile farmland, among others, naturally support an agricultural and industrial population. This promotes entrepreneurial activities and the accompanying economic system (capitalism).  On the other hand, nations possessing inadequate natural endowments pose unique challenges to the government, and in a bid to cater for the general welfare of their citizens, such nations might embrace a more welfaristic system, as the case might be.

3. The Political will of the People: This factor stems from the people’s historical backgrounds.  If an economic system is insensitive to the citizens’ political consciousness and sensibilities, dissatisfaction about it might alter the existing economic system, and bring in the process a more welfaristic one.

4.  Instability in the Mode of Governance: This factor refers to short-term and frequent transitions among heads of government such that long-term planning and policy implementation in the given economy gets disrupted.  As a result, the larger populations might agitate for a change in the existing economic systems.




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Benjamin Atuma
I am a writer, teacher, web consultant, and an entrepreneur.  Enjoy blogging, business networking, traveling, and preaching the Gospel of Jesus.

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