What is a mixed economy?

A mixed economy is both a system of markets and economic planning combined into one. It is an economy that has some central planning as well as private enterprise driving GDP growth, employment and wealth. It includes elements of both a market and planned (command) economy.

A mixed economy is one where both the state and the private sector direct the economy – there is a combination of private and public ownership. While much of the country’s markets are free, there is a certain amount of economic intervention.

The majority of mixed economies see themselves as slanting towards capitalism, i.e. they believe they are market economies. However, they have strong regulatory supervision and governmental provision of public goods.

North Korea and Hong KongNorth Korea has a planned (command) economy, while Hong Kong is the closest to a purely market economy.

State run businesses are widespread globally

Several mixed economies have state-run enterprises such as the BBC (British Broadcasting Corporation) in the UK, Fannie Mae and Freddie Mac in the US, ABC (Australian Broadcasting Corporation) in Australia, Aéroports de Paris (52% state owned) in France, Petrobras in Brazil, and and Deutsche Bahn AG (railway company) in Germany.

The nations of North America, Western Europe, Japan and Australasia, i.e. the rich countries, have mixed economies where both private enterprises and government regulations have come to be integral and vital to the economy.



The Nordic (Scandinavian) nations, which are often described as welfare states, also have mixed economies. Sweden, for example, has tens of thousands of private companies, some of them multinationals such as Volvo, TetraPak, Ericsson and Electrolux. However, Nordic countries have sophisticated and generous welfare systems, which are provided by the state and funded by taxpayers.

Very few command economies today

The former Soviet Union had a command economy – the government controlled all major aspects of the economy and economic production.

Very few countries have command economies today – just Cuba, North Korea and China. China and Cuba are gradually moving towards a mixed economy.



Merriam-Webster (a dictionary) defines the term ‘mixed economy’ as follows: “An economy in which both publicly and privately owned enterprises operate simultaneously.”

Nations closest to a free market economy

According to the 2015 Index of Economic Freedom by the Heritage Foundation, the countries closest to a market economy (in order) are: 1. Hong Kong. 2. Singapore. 3. New Zealand. 4. Australia and 5. Switzerland.

The Index places the US and UK in 12th and 13th places respectively. At the bottom of the list are Venezuela (176th), Cuba (177th) and North Korea (178th).

Video – A mixed economy

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