Analytical Framework for Understanding Economic Systems

Abstract

Although there exists no unique, commonly accepted definition of an ‘economic system’, nor is there an objective way of delineating that part of the total social experience to be described and analysed under this topic, yet economists recognize the existence of different economic systems in their study of economic phenomena. At the national level different groups of countries, and specific countries, are seen to have different economic systems. Why are economists interested in economic systems in spite of the difficulties they face in delineating the boundaries of economic systems? The rationale for the analysis of economic systems and their comparison can be seen gathered from answering one general question: What effect does the choice of the socio-economic system have on the socio-economic welfare of the people living in that system, and those in other systems?