Global Economic Systems and International Trade Blocs

Economic Systems and Global Models

Capitalism and the Mixed Economy

Capitalism is based on a free market economy, private ownership of the means of production, freedom to work and hire, and state intervention on a small scale. One variation of this is the mixed economy, which involves greater intervention from the state in terms of establishing laws, regulating certain prices, and providing for the social well-being of its citizens.

Communism and Centralized Planning

In Communism, the economy is planned and centralized by the state; the production process is controlled, and the state is the owner of the means of production. Private property and initiative do not exist, only state-owned properties. Its objective is to achieve collective benefit through policies decided upon by the state.

The Prevalence of the Market Economy

The market economy is currently the most widespread of the different types. The United States is the main model, whereas the countries in the EU have variations, such as the mixed economy. The market economy, through private initiative and economic globalization, has led to the creation of large national and multinational companies.

Global Economic Leaders and Emerging Powers

Established and Developed Economies

World economic leaders are the United States, the EU, and Japan, but their importance is now shared with other countries. Canada and Australia also have developed economies, although they have less global influence.

The Rise of the Asian Tigers

The technological development and growth that has taken place in some countries since 1970 has led to the emergence of a group of countries called the Asian Tigers:

• South Korea
• Taiwan
• Hong Kong
• Singapore

Resource-Rich Nations and Emerging Blocs

OPEC and Petroleum-Producing Countries

The Organization of the Petroleum Exporting Countries (OPEC) is headed by Saudi Arabia, the largest producer in the world. Member countries include:

• Saudi Arabia
• Kuwait
• Iran
• Iraq
• Venezuela
• Algeria
• Angola
• Ecuador
• Libya
• Nigeria
• Qatar
• Gabon

The BRICS Nations

BRICS is made up of emerging countries: Brazil, Russia, India, China, and South Africa. Although they are not a distinct group, all of them have a rapidly growing economy and are becoming more and more important.

International Trade Agreements and Blocs

Global trade is further organized through various agreements and associations, including:

• North American Free Trade Agreement (NAFTA)
• MERCOSUR (Argentina, Brazil, Paraguay, Uruguay, Venezuela, and Bolivia)
• The Andean Pact
• The Association of Southeast Asian Nations (ASEAN)