Global Business Environment

SUMMARY: Economies of countries can be classified based on parameters such as ownership of means of production and levels of economic development. Based on the ownership of the means of production, economies can be classified into capitalist economy, socialist economy, and mixed economy. Capitalism is an economic system characterized by private ownership of productive goods and services. Socialism is an economic and political system in which private property is abolished and the means of production (i.e., capital and land) are collectively owned and operated by the state. In a mixed economy, some of the means of production are owned by the government while some is held by private individuals. Based on their level of development countries can be classified into "developing countries" and "developed countries." The World Bank relies on income levels to classify countries into these two categories.