Types of an Economy

Economy is of various types. Smallest type of economy is a Household Economy, where a few members satisfy family wants by earning something. Many a time an economy is divided into Village economy, Town economy, Regional economy, National economy and whole world or International economy. Generally, the economy is classified on the basis of ownership and level of development.

(a) On the basis of ownership. An economy is of three types viz. (i) Capitalist economy, (ii) Socialist economy, and (iii) Mixed economy.

(b) On the basis of level of development. An economy is of two types viz. (i) Developed economy, and (ii) Underdeveloped economy.

Capitalist Economy

A capitalist economy is an economy in which all the economic activities are regulated and controlled by market conditions without any outside interference. In other words, a capitalist economy is a system where there is a private ownership of factors of production. Production is done with a view to earn profit. In such an economy what, how much and where to produce depend on price mechanism. Thus, the people in such an economy have ftll economic freedom as producers, sellers, buyers, employees, employers, owners and consumers. Capitalist Economy is also known as Free Enterprise Economy, Free Market Economy etc.

According to Prof. McConnell, “A capitalist economy may be characterized as an automatic self-regulating system motivated by the self-interest of individual and regulated by competition.”

Socialist Economy

Socialist economy is an economy which is owned and controlled by the government. Here all the economic resources of the country are owned by the government and these are used in the public interest. All the like what to produce, how much to produce, how to produce etc. are taken by the Government in view the public interest. Economic activities are controlled and managed by a Central Planning Authority. Income is also distributed among individuals on the basis of their needs and efficiency. Thus, Socialist economy is a kind of system under which economic system of the country is controlled and regulated by the Government so as to ensure welfare and equality of opportunity to the people in a society.
According to Samuelson, “Socialism refers to the Government ownership of the means of production, planning by the Government and income redistribution.”

Mixed Economy

It is a mixture of the characteristics of capitalist and socialist economies. In this economy, like capitalist economy, certain economic activities are fully owned and controlled by private enterprise and rest of the economic activities, like socialist economy, are controlled by the Government. Mixed economy is a golden mean between two opposite ideologies. It is a coordination and mixture of the merits of both the economies, setting aside their demerits. Thus Mixed Economy is that economy in which private ant/public sectors co-exist and coordinate for achieving a common economic objective.
According to Samuelson, “Mixed economy is an economy in which both public and private institutions exercice economic control”

Developed Economy

It is an economy where the pace of economic growth is at its maximum, national and per capita income is very high and country has reached the tertiary stage after crossing primary and secondary stages. The standard of living in such an economy is very high. Generally, the word ‘economic growth’ is used for a developed economy. The economies of the countries like America, England, Germany, Japan, Canada, France etc. are developed economies.

Under-Developed Economy
Under-developed or developing economy is that where there is no full or maximum use of available resources due to vicious circle of poverty. Per capita income is less and standard of living of the people z low, In other words, this is that economy where (a) per capita real income is lower than in developed countries, (b) human’ and natural resources are not fully utilized, (c) production technique is inefficient and traditional and (d) there is desire for economic development. But as the country goes on developing, the modern industrial sector, though small, keeps increasing in size and the traditional agricultural or rural sector keeps shrinking.

According to Prof. M.P. Todaro, “Under-developed economy is that economy in which there are low level of living, absolute poverty, low per capita income, low consumption levels, poor health services, high death rate, high birth rate and dependence on foreign economies. “The under-developed economies in the world are Pakistan, Indonesia, Ceylon, Bangladesh etc.

Concept of Economic Development


The issues related to Economic Development and growth caught the attention of economists mostly after two world wars, when it was realised that stable global peace is not possible unless majority of countries enjoy comparable economic prosperity and have therefore, equal power. Economic development is of utmost significance to all economies. The term Economic Development and Economic Growth are used interchangeably. But economists make distinction between these two terms. Economic development is something more than economic growth. Economic development means growth with change and increase in welfare. Economic development, economic growth and sustainable development concepts are necessary for understanding the concept of economic development.

The term Economic Development has been defined differently by different economists.

In the words of Meier and Baldwin, “Economic development is a process where in an economy’s real national income increases over a long period of time. And if the rate of development is greater than the rate of population growth, then per capita real income will increase.”

According to Colin Clark, “Economic development is simply an increase in economic welfare.”

Thus, Economic development is that process by which per capita income and economic welfare of the country increases over a period of time.

Features of Developed Economies

The main features of the developed economies are as follows : (1) High per capita real income, (2) High rate of growth, (3) Developed human capital, (4) Low growth rate of population, (5) High standard of living, (6) Advanced technique of production, (7) Wider size of market, (8) Growth-oriented economic agencies, (9) Advanced foreign trade, (10) Developed natural resources.

The word growth, oftenly used as a synonym of the term development, but they have different implications. Economic growth refers to quantitative changes. Economic growth means increase in ieal income or output as well as per capita income.
In the words of Paul Baran, “Let economic growth be defined as increase over time in per capita output of material goods. “According to McConnell, “Economic growth may be defined as an increase in the economy’s gross national product or real national income.”

Growth and Development

The main difference between Economic growth and Economic development is as follows:

(1) Economic growth refers to the long-term increase in real per capita income while Economic development refers to the long-term increase in real per capita income and economic welfare.

(2) Economic growth is related to the problems of developed economies while Economic development is related to the problems of underdeveloped economies.

(3) Economic growth is a quantitative term while Economic development is a qualitative term.

(4) Economic growth ignores distribution of income while Economic development does not ignore the distribution of income.


The word ‘sustainable’ means something which is not short lived but can continue in future also. Sustainable development is that process which satisfies the needs of present generation without causing any trouble to the efficiency of the future generation to meet their own needs.
In the words of Mahbub ul Haq, “It is the sustainability of human opportunities that must lie at the centre of our concern.”

Features of Sustainable Development
The main features of sustainable development are as follows: (1) Pollution not Increase, (2) No Limit on Development, (3) Efficient Use of Natural Resources, (4) Quality of Life of the Future Generation not Reduced.

Conditions of Sustainable Development
The main conditions of sustainable development are as follows: (1) Comprehensive Development of the Rural Sector, (2) Economic Development, (3) No Degradation of Natural Capital Stock, (4) Reduction in Industrial and Agricultural Pollution.

 Significance of Sustainable Development
The main points of significance of sustainable development are as follows:
(1) Raising the Standard of Living
(2) No Loss to the Living Standard of the Future Generation
(3) Improvement in the Quality of Life and Health
(4) Environment Conservation.

Measures for the Promotion of Communal Harmony and Social Cohesion

National integration in India is the crying need of the hour. We must all work for a strong and prosperous nation. We shall now study the factors which can help us to achieve this object.

1. Indian Constitution aims at National Integration: Our Constitution declares that India as a secular and democratic state. There is no state religion. Every person is free to adopt or preach the religion of his choice. The state makes no distinction between the people on ground of religion.
India is a democratic state. The people are the source of all power in India. The people elect their representatives through universal adult franchise. All persons are equal before law. All citizens enjoy the right to freedom of speech and expression and assemble peacefully without arms. Every community in India has the right to preserve or conserve its own language, script or culture. Our country has abolished untouchability by law. The interests of the weaker sections of the society the Scheduled Castes and Scheduled Tribes, have been fully safeguarded. The Directive Principles of State Policy direct the government to work for the social and economic uplift of all the people.

2.Common culture: India is the great example of doctrine of “One in Many”. We have many common social institutions and customs in the country. People belonging to all the castes and classes joined hands in the freedom struggle against the British. The famous festivals of Diwali, Dussehra, Holi, Id and Christmas are celebrated by the people together throughout the whole country. The art of classical music and dance is also uniform. We have also the uniform system of education in the country Common cultural programmes are held by all the people belonging to different regions. All these factors help in national integration.

3. Uniform Economic Development: The British Government did not take adequate measures for the economic development of the country Its only aim was to drain wealth from India. After the independence, our government has launched nine Five Year Plans for the economic growth of all the regions of the country. Large scale industries have been established even in the remote corners of the country. Irrigation projects have been completed in the desert regions of the country. The economic development of all the regions of the country has cemented the spirit of national integration.

4. Emphasis on celebrating national festivals : Our Government lays stress on the celebration of national festivals like Gandhi Jayanti, Independence Day, Republic Day etc. People belonging to all the religions, castes and classes celebrate together these festivals. It promotes a feeling of unity among the people.

5. Interdependence of different regions : No region of India is economically self sufficient, Each region depends on the others to fulfill its needs. It has given a great impetus to inter-state trade. If there is scarcity of one thing in a state, it can easily secure its supply from other states. It thus gives a sense of unity to all the parts of the country.

6. The role of National Symbols : Our national symbols also promote national unity Our tricolour national flag, national anthem, national songs and national emblem create a sense of patriotism and unity They bind the people of the country into one nation. They create a feeling among us that we have one motherland. If any body shows disrespect to these symbols, he does not love his country. He is not a true patriot. Whatever social, religious and political differences of the communities may have been in the past, communal harmony and cohesion is a powerful force which can end deep rooted bitterness, hatred and enmity. Let all the communities work together for the uplift of the nation.

Child Labour and Child Abuse in India

India is a vast country and has a huge population. The children, the aged and the disabled constitute a large segment of the population. This section of our society is not self-sufficient. These weak and helpless people cannot themselves alone improve their lot and utilize their talents and energy We shall now look into their problems and suggest measures for their welfare.

Problems of Children in India

The future of a country is in the hands of its children. Children must be brought up carefully. Our country has a large population of children. We are responsible for giving them proper food, good health, sound education and proper training in citizenship. But unfortunately, ours is not an advanced country. Most of the children do not get sufficient food and go half naked. They live in slum areas in insanitary conditions. They avoid going to schools to receive education. The children who do not attend schools, loiter in the bazars and become criminals. They indulge in various types of anti-social activities. The delinquent child becomes a burden on the family. He is likely to indulge in vices like drug addiction and beggary. He can become physically and mentally weak.

Child Labour and Child Abuse

The rapid industrialisation of the country has led to the employment of children on a large scale in the industries. Our Constitution does not allow the employment of children below the age of 14 in any factory or mine or to engage in any hazardous employment. This provision is laudable for its humanitarian aspect. It also protects the health of the children, the future
citizens of India. But this law is not strictly enforced. The employers ignore the law and employ the children in the hazardous jobs. By making the children work at a tender age, the innocence of the child is destroyed. Their natural process of growth is hampered. Depriving children of their childhood will not allow them to develop balanced personalities. If the younger generation is not healthy, strong and stable, the future of
the country will be at stake. The developed countries like the
U.S.A., Britain and France have strongly protested against the exploitation of children. The U.S.A. even banned the import of the Indian carpets manufactured by the children below the age of 14 in the factories in Mirzapur in Uttar Pradesh. The European Economic Union too has passed the law to stop the import of goods made by the children below the age of 14 in most of the developing countries.

Child Abuse

The most shameful act of child abuse is the sexual exploitation of the children. Recently, it was reported that thousands of children between the ages of 10 and 15 are sexually abused by foreign tourists in the coastal areas of Sri Lanka, India and in some countries of South East Asia. These ignorant children are lured by money to indulge in such• immoral acts. No effective steps have been taken by the governments of such countries to eradicate the evil of child abuse.

The Directive Principles of State Policy state that the state shall impart free and compulsory education to the children until they attain the age of 14. It will give them facilities to develop in a healthy manner and in conditions of freedom and dignity It is the duty of the state to see that childhood and youth are protected against exploitation. But we have not succeeded in achieving such aims. The anti-social elements still employ children for smuggling of goods, for the sale of smack and for other immoral purposes. The Government has not succeeded much in removing
the evil of child abuse.

It is our duty to check petty crimes or delinquency in the children. The children, the future citizens of India, must get proper education. The Government and the social organisations should make proper arrangements for food, clothing and recreation of the poor children. The Declaration of the Rights of the Children in 1959 gives special protection to the children and enables the children to enjoy certain rights without any distinction of religion, race, sex, colour and creed. We celebrate Pandit Nehru’s birthday as the Children’s Day in our country every year. The Government of every country in the world should make efforts for all round development of the children. The children must be saved from falling in the hands of anti-social elements. Such people misguide them. They kidnap them and force them to become beggars. The children should not be employed in the factories. The greedy employers exploit them. The parents should create a healthy atmosphere in the family in which children can lead a better life and become good citizens.