Economies in Transition: Poland.

Essay by code788High School, 11th gradeA, December 2003

download word file, 2 pages 4.0

A command economy is an economy, which is planned by the government. The command economy is under the control of the governing party. The production and distribution of goods and services is totally all managed by the government. The distribution may use the rationing system or people will have to queue. The command economy relies on 5, 10, 15 year plans to push economic growth within the nation. The plans require a large amount of information, which is usually not accurate. The government produces production targets which are issued to the producers. However there are no incentives for the producers to take risks and be innovative. There is no competition and there are no rewards for achieving the production targets. The government also usually only cares about the quantity produced not on the quality of the products. There is also usually very little choice of products in a command economy.

A mixed economy is a mixture between the free market and the planned economy. Most of the industries are owned by private owners. There is much competition between the companies so the producers are innovative and will take risks. There is much choice of products in a mixed economy. The goods are allocated through the price mechanism where people who can afford the goods are the people who get the goods. The government also steps in to provide some merit goods such as education and healthcare for people who are unable to afford it. It also interrupts companies who are gaining a monopoly as monopolies are not good for the consumer.

Poland experienced many difficulties during its transformation. There was a very large unemployed force during the time. There was a very low unemployment rate during the command economy. During the transformation many of the companies had...