NATIONAL ECONOMIC PLANNING

( Against
)
PRESENTED BY :-
MASUMI AMATYA
DEEPANNITA
MOHANTY
KARIM DUMBA
ARVIND KUMAR 1
IT IS THE STATE OR IT IS THE
MARKET

2
IS IT THE STATE !

3
 HISTORY OF STATE
ECONOMY
ta te e co n o m y sta rte d in co u n trie s lik e :
Ø
q
qSoviet union (1922)
q
qChina (1949)
q
qIndia (1947)
q
qIraq (1979)
q
4
 IS IT THE SATE

ØState economy is an
economic system in which
central government makes
all decisions on the
production and
consumption of goods and
services.
Ø
5
 IS IT THE SATE

Ø
ØAn state economy where
supply and price are
regulated by the
government rather then
market forces.

6
 IS IT THE SATE


ØIn this state /government
controls all the major
sectors of economy and
formulates all decisions
about the use of
resources and distribution
of output. 7
 IS IT THE SATE


It is most extensive form is
referred to as :
q
q
qCommand economy.
q
qCentrally planned economy.
q
qControl economy.

8
 IS IT THE SATE
A p la
Ø
n n e d e co n o m y co n sist o f:
q
q
qState - owned enterprises .
q
qPrivate enterprises directed by
state.
q
qCombination of both
enterprises. 9
 Advantages of state
economy
Østability.
Ø
ØMeeting collective objective by
individual sacrifice.
Ø
ØComparison with capitalist
corporations.
Ø
ØPossible advantages over mixed
economies. 10
 Disadvantages of state
economy
Ø Inefficient resource distribution.
Ø
Ø Can not determine as well as
prioritize social goods better then
the market can..
Ø
Ø Lack of incentives for innovation.
Ø
Ø Suppression of economic democracy
and self-management.
Ø
Ø Corruption .
11
IS IT THE MARKET !

12
 IS IT THE MARKET

Ø
Ø
Ø
ØA market economy is free of
governmental influence,
collusion and other external
interference.
Ø
Ø
13
 IS IT T H E M A R K E T

Ø
Ø
Ø
ØIt is an economy which is
operated by voluntary
exchange in free market and is
not planned or controlled by
central authority; capitalistic
economy.
14
 IS IT THE MARKET

ØIt allocate resources based only

on the interaction of market
forces like:
Ø
qSupply.
q
qDemand .

15
ADVANTAGES OF MARKET
ECONOMY
ØCompetition between different
firms leads to increased
efficiency.
Ø
ØForeign investment is attracted
as word gets out about the
new opportunities for earning
profit.
Ø
ØMost people work harder.
16
ADVANTAGES OF MARKET
ECONOMY
ØThe forces of production, or at
least those involved in making
those things people with
money at home or abroad want
to buy, undergo rapid
development.

ØA great variety of consumer
goods become available for
those who have the money to 17
 ADVANTAGES OF MARKET
ECONOMY
Ø
Ø
Ø
Ø
ØThe size, power, and cost of the
state bureaucracy is
correspondingly reduced.

18
DISADVANTAGES OF MARKET
ECONOMY

Ø
Ø
ØDistorted investment priorities.
Ø
ØWorsening exploitation of
workers.

ØOverproduction of goods.

19
DISADVANTAGES OF MARKET
ECONOMY


ØUnused industrial capacity.

ØGrowing unemployment.

ØGrowing social and economic
inequality.

20
Characteristics of Market
Systems
PRIVATE FREEDOM OF
ENTERPRISE
PROPERTY & CHOICE

ROLE OF
SELF - INTEREST COMPETITION
Characteristics of Market
Systems
PRIVATE FREEDOM OF
ENTERPRISE
PROPERTY & CHOICE

ROLE OF
SELF - INTEREST COMPETITION

ACTIVE , BUT
MARKETS LIMITED ,
& PRICES GOVERNMENT
1. Private Property – the right of individuals to
exercise control over things owned .

2. Freedom of Enterprise ( business ) & Choice

Can move within the economy to any job , to
buy or sell property , or start a business .
K-
Mart
?

3. Role of Self - Interest – each producer or consumer

tries to do what is best for themselves.
themselves
4. Competition – economic rivalry of a large
number of buyers & sellers.[central mechanism of
market economy]
Monopolies become fat & unresponsive to
consumers(higher prices & fewer choices).
choices
5 . Markets & prices.
prices Markets bring the buyers and sellers into contact .

Prices send signals ( Like HUGE NEON BILLBOARDS . High prices send
signals to increase production and for other producers
to
enter the market.
market

Low prices send signals to decrease production

and for producers to exit the market.
market

6 . Limited Government Intervention in the economy .

The role of government is one of “ laissez faire .” [ “ hands
off ” ]
The East
 The soviet union government refused to let
soviet industries produce enough
consumer goods.
 For Eastern Europeans even food and
clothing were source.

The West

 The western nations grew richer

,Russia and its satellites grew
poorer.
 Westerners could buy a variety of
goods.
 The west spent more money on
science and technology and
consumer goods.

Supply and demand

 The forces that rule the market are:

supply demand and competition.
 The forces decide what products will
be made who will make them and
what their price will be.
Who won the cold war?

 Thewest won the cold war because

they spent a lot of their money in
technology and providing goods
for people. But the soviet union
used their money on farm
equipment military weapons and
tractors.
IT IS THE STATE OR THE MARKET ?

30
ECONOMIC CYCLE

31
PRESENT U.S.A G.D.P

Source : world Bank.

32
PRESENT U.S.A G.D.P

33
 PRESENT U.S.A G.D.P
YEAR MARCH JUNE SEP DEC AVERAG
E
2009 -3.30 -3.80 -2.30 -3.13

2008 2.00 1.60 0.00 -1.90 0.43

2007 1.40 1.90 2.70 2.50 2.13

2006 3.00 3.00 2.20 2.40 2.65

Source = bureau of economic Jan 1 st 2006 to

analysis Nov . 25 th 2009 34
PRESENT CHINA G.D.P

35
 PRESENT CHINA G.D.P
YEAR GDP INDEX GDP Rmb GDP REAL
IN REAL billion at PERHAND ANNUAL
2009 TERMS current
21718 Rmb. GROWTH
7.7
prices RATE (%)
2008 30067.0 9.0

2007 24661.9 11.4

2006 21087.1 16084 11.1

2005 18386.8 14040 9.9

36
PRESENT BRAZIL GDP

37
 PRESENT BRAZIL GDP
YEAR MARCH JUNE SEP DEC. AVERAG
E
2009 -1.77 -1.16 - - -1.47

2008 6.12 6.20 6.81 1.27 5.10

2007 5.30 5.85 5.38 6.14 5.67

2006 4.39 2.19 4.68 4.65 3.98

SOURCE : IBGE Jan 1 st 06 to Nov . 26 th

38
09
PRESENT RUSSIA GDP

39
 PRESENT RUSSIA GDP
YEAR MARCH JUNE SEP DEC. AVERAGE

2009 -9.80 -10.90 -8.90   -9.87

2008 8.70 7.50 6.00 1.20 5.85

2007 7.50 8.00 7.70 9.00 8.05

2006 6.60 7.60 7.80 8.50 7.63

40
CONCLUSION !!!

41
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