Introduction of economy in Malaysia, Malaysia is one of democratic country that has many race, religion and nationality. Economy in Malaysia also open-stated oriented and growing relatively also new in industry market. In Malaysia, we practice mixed economy for our country.
There have 3 factors that responsible with economy in Malaysia:
Definition of Mixed Economy
Mixed economy means that part of economy is left to the free market and the other part is run by the government. In reality, most economic are mixed economy with varying degrees of state intervention. Mixed economies start from the basic of following private enterprise to run most business. There have the country which practises mixed economy such as Sweden, Iceland, United Kingdom, Russia, China, Hong Kong and many more. All this country economy is manage by government and the rest left to private firms and individuals. Characteristic of Mixed Economy
Here have many characteristic of mixed economy; the first characteristic of mixed economy is public and private ownership of resources. The public and private company may play important roles in mixed economy. Private enterprise conduct business freely and government encourages the private sectors by providing them with infrastructures and facilities. Besides that, the other characteristic is price mechanism and economic plans in making economics decisions. The price mechanism is used to price both goods and services. However, commodities such as sugar, oil and rice are declared as controlled items in Malaysia and the government will fixed the price. Government also will help the company in Malaysia to control income disparity. In Malaysia, government will control the income disparity through income taxes and welfare payment. The government also will control over profits, wages and rents. The government will help to narrow the income gap between rich and poor. Besides that, government will not intervention in the company except for particular industries. In mixed economy, the government will use the legist ration for unsaved good categories as illegal products such as military items. Besides that, government also uses direct provision, for example in Malaysia, government education, defences and health to increase the standard of living. The government also will carry out certain project or produce the private sector considers profitable. For example, In Malaysia government will administered and cater low cost housing project to the lower income group. This project is not profitable venture for private enterprise. In mixed economic, there is significant co-operation between the public and private sectors leading to economic development. Economic decision in a Mixed Economy System
In mixed economic, private and public company will decide what they want to produce. The good that they produce and the services they want to provide will depend on the consideration of social welfare and economic growth. The public and private sectors also will decide the technique to produce in different production. They also will decide how provide the services. Private and public sectors also will decide for whom they will distribute their goods and services. The price mechanism does not fully function in mixed economies. Advantages of Mixed Economy
There have many advantages for mixed economy. Most business and industry can leave for private firms. Private firms tend to be more efficient than government will controlled firms because they have a profit incentive to cut costs and be innovative. Besides that mixed economy can reduce the amount of government regulations and government controlled prevalent in a command economy in Malaysia and mixed economy can enable some government regulation in areas where there is market failure. The regulation on the abuse of monopoly power for example, prevents mergers; prevent excessively high prices and taxation and regulation of goods with negative...
Please join StudyMode to read the full document