How do economic systems vary between the US, China, and Russia?
Globalization has created a good deal of confusion as to the economies of the major three countries in the world. We typically think of the United States as a capitalist, Russia as communist, and China as similar to the Russian economic system. Due to globalization, those terms may be too simplistic of a generalization in describing the economic systems of the three. Let's take them in alphabetical order.
China. Beginning in the 1980s, China began to recognize the economic advantages the country had in the form of cheap labor. Before the 1980s, there was a minimal distinction between the economical style of Russia (former the Soviet Union) and China. China was a command economy patterned in a Marxist manner. When President Nixon opened the Chinese market to the United States, the communist leaders of the country quickly understood to participate in the global economy, China would need to make rapid adjustments. China refers to its economy as a socialist market economy. The state continues to control every facet of the economy, but in the global markets, China allows for some play in the capitalist system when it benefits the Chinese economy. Many economists believe China will be the world's largest economy by the end of the year 2020. In terms of GDP, China ranks second in the world (Investopedia, 2019).
Russia. Much like China, once the Soviet Union collapsed during President Reagan's era, Russia saw that its weak economy degraded its influence in the world. To some extent, Russia abandoned the command economy for a mixed economic model. Beginning in 1990, the Russian government allowed for some privatization of industries (agriculture) while continuing to maintain government ownership of others (energy section). Russia's economy differs from China in one respect that Oligarchs control much of the major industries and wealth. Having few products other than energy to sell on the global market, Russia continues to struggle economically. In terms of GDP, Russia ranks eleventh in the world (Investopedia, 2019).
The United States. Though many people believe the United States is 100% capitalist, many economists disagree. The U.S. may be the most committed to a capitalist style of economics, but in recent years there has been a trend to allow for government intervention when it is beneficial. Some economists believe due to globalization, the U.S. economy is moving more to a mixed model. However, where the U.S. differs from its global competitors of China and Russia is the notion of property ownership. In China and Russia, the property is owned by the state and a few closely aligned party members. In the U.S., most property is held by individuals, and the protection of the rights of property owners is of paramount importance to the economy. It is more accurate to call the United States as a capitalist economy than a mixed. In terms of GDP, the United States ranks first in the world (Investopedia, 2019).
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