1. Compare and contrast the rise and fall of the state economy and the transition to the market model in the former Communist countries (particularly Russia and Eastern Europe), the developing world (particularly Latin America) and Spain. Use as many exam

INTRODUCTION

A state economy is an economy where the state or the central government plays the major role . Commonly state economies can be referred to as either a planned economy or as a command economy and or centrally planned economy . In essence a state economy is an economic system in which the state or government controls the factors of production and makes all decisions about their use and about the distribution of income . In such an economy , the planners decide what should be produced and direct enterprises to produce those goods p

A planned economy may either consist of state owned enterprises , private enterprises who are directed by the state , or a combination of both Though "planned economy " and "command economy " are often used as synonyms , some make the distinction that under a command economy , the means of production are publicly owned . That is , a planned economy is "an economic system in which the government controls and regulates production , distribution , prices , etc " But a command economy , while also having this type of regulation , necessarily has substantial public ownership of industry . Therefore , command economies are planned economies , but not necessarily the reverse (example : Nazi Germany 's private ownership yet use of the Four Year Plan could construe them as a planned economy , but not necessarily a command economy , while the Soviet Union with public ownership would be a command economy

Important planned economies that existed in the past include the economy of the Soviet Union , which was for a time the world 's second-largest economy . Beginning in the 1980s and 1990s , many governments presiding over planned economies began deregulating and moving toward market based economies by allowing the private sector to make the pricing production , and distribution decisions . Although most economies today are market economies or mixed economies , planned economies exist in some countries such as Cuba and North Korea

A command economy is one in which the coordination of economic activity , so essential to the Viability and functioning of a complex social economy , is undertaken through administrative means

Since the signing of the treaty of Westphalia in 1658 , that created modern states the issue of command or free market economies did not exist as such . This is because within the immediate period after the signing of the treaty many states were involved in military expeditions with the main aim of empire building . Within this period many regions of the world experienced many wars including those that led to colonialism in Asia Africa the Americas and Latin America . After much attempts on empire building the First World War created much differences in ideological perceptions between different states as the need to create allies and defence pacts became imminent . In to achieve this many countries in Eastern Europe entertained the idea of collective efforts to increase national output . Within the period after the first word war the Union of Soviet Socialist Republics was already miles ahead in practising real command economics

The end of the Second World War and the onset of...