How a Market Economy Work? Advantages of a Market Economy

Examples of countries with a Market Economy System

There are no totally free-market economies in the world today. Most economies are mixed market economies because they control some of the means of production. However, some economies are freer than others.

The five countries with the most economic freedom, according to the Fraser Institute’s Economic Freedom of the World Rankings, are Hong Kong, Singapore, New Zealand, Switzerland, and the United States.

These research rates countries based on the following economic freedom pillars: personal choice rather than collective decision, voluntary exchange organized by markets, freedom to participate and compete in markets, and protection of people and property.

Governments have a great level of influence over how wealth is produced and dispersed in both planned and command economies. They enact regulations governing the prices of products and services, establish employee compensation, and regulate how much any corporation or firm can own and produce.

In contrast, customer demand, rather than a central authority, drives how firms operate and the methods employed to manufacture goods and administer services in free-market economies.

Commodities are sold at the highest feasible price, and individual organizations and businesses establish the pay and levels of supply for their employees. Profit is what drives all production, supply, and demand, forcing enterprises to be as efficient as possible, according to the notion of a free market economy.

In a nutshell, market economies are everywhere. Each country contains free-market elements, however, there is no such thing as a completely pure free-market economy: it is more of an idea than a practical reality.

The majority of countries around the world have a mixed economic system, but the examples of market economies usually presented by the economists are United States, Japan, and Hong Kong. Why we cannot say that they are pure free-market economies?