ECONOMIC SYSTEM
Each country operates under some economic system. Economists define an economic system “as the sum total of the devices by which the preference among alternative purposes economic activity is determined and by which individual activities are coordinated for the achievement of these purposes. The central problem of an economic system is the allocation of resources.”
Capitalism, in the broad sense, is a system of private in both producer and consumer goods, freedom of contract and competition, with limited government intervention in economic affairs. USA, UK, Germany follow Capitalistic system.
Socialism is a system of collectivization of means of production; there are no private profits, but incomes may differ according to individual skills and amount of work done; also personal property for consumption purposes is allowed. China, North Korea etc follow this type of system
It is clear that to a great extent economic system of a country determines its economic environment. Many countries like India try to adopt a middle path of the two system by taking some points of each.
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