2.1. Explain how economic systems attempt to allocate resources effectively.

2.1.1. Three categories of economic systems.

1. Free market economy (capitalism):
2. Command economy (Planned economy):
3. The mixed economy:
2.2.2. Table of economic systems effective resource-allocation:
Factors
Types of economic Countries
Entrepreneurship Free market
Hong
economy
Kong

Natural
resources

Command
economy

China

Entrepreneurship The mixed

economy

UK

Effective resource-allocation
Hong Kong is considered among the
best countries for business ( No 1
trade freedom globally-retrieved from
forbes data).
The entrepreneurial environment is
reported to be the worlds most
efficient. It requires no minimum
capital for start-up business (retrieved
from heritage index).
It also remains the average tariff rate
by 0 percent. According to 2016
Index of economic freedom, the
foreign investor can maintain almost
100% ownership along with
participating in a highly-competitive
and well-capitalized market.
China possesses major shares in
various mineral resources (66%
global Wolfram reserves in 2011,
50% rare earth reserves- retrieved
from statista).
In 2010, China hold 97% of rare earth
production and the foreign trade of
mineral products comprised 25 % of
Chinas total foreign trade in 2013
(statista, 2016).
With the awareness of the importance
of natural resources to the economy
growth, China has implemented
strategies concerning exploring new
resource fields (retrieved from
statista, 2016)
UK opens their door to
entrepreneurship through putting
forward policies such as setting up a
business within 48 hours as well as
multiple financial aid choices to
benefit them joining the market.
According to Centre for
entrepreneurs, the number of start-up
business rose from 440600 in 2011 to
581173 in 2014 as a result of

government-run national campaign

Start up Britain Campaign.
Along with UK entrepreneurship
growth is the decrease in the
unemployment rate from 7.7% in
April,2011 to 5.5% in December,
2014 (data retrieved from Eurostat,
Bureau of Labor statistics). The
unemployment rate continued
decreasing and held on at 4.9% up to
date (data retrieved from Office for
national statistics).
On the other hand, entrepreneurship
made some contribution to UK GDP,
witnessing 2.6% growth and 1.7% 5
year compound annual growth (data
retrieved from Heritage index).