Mixed (Dual) Economies

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The free market economy is practiced in developed countries and international trades and is based on established laws of supply and demand. Many problems inherent in developing countries, however, hinder the full implementation of this system. These include political instability, corruption, overpopulation, and lack of financial infrastructure. Political instability results from social inequality, excessive poverty, lack of political freedom, and arbitrary decisions by authoritarian regimes. As a result, the transition of government is unlikely to be orderly and is often associated with coups, bloodshed, and political apathy among the people. Political instability discourages foreign and internal investment and encourages the flight of qualified engineers and technocrats. Because there are no checks and balances on government leaders, citizens have a deep mistrust of their government, and corruption is usually rampant and a way of life in many developing nations.

Generally, low-income developing countries have a dual economy, one being the traditional, often non-market economy, and the other a western-style free market economy. The traditional economy sector financing is limited, and trades are largely in local currency and in cash, even at times by bartering. These systems do not have an institutional apparatus to collect taxes. Even if such a system is in place, it is often rigged with fraud and bribery. The free market economy sector is used in large financial transactions and when the government or private enterprise engages in international trading. Financing is usually possible and often the norm.


(1) Toossi Reza, "Energy and the Environment:Sources, technologies, and impacts", Verve Publishers, 2005

Further Reading

Colander, D. C., Economics, 3rd E., Irwin-McGraw-Hill, 1998.

Bosselman, F., Energy, Economics and the Environment, Second Edition, Foundation Press, 2005.

Energy Economics, Science Direct Elsevier Publishing Company. Publishes research papers concerned with the economic and econometric modeling and analysis of energy systems and issues.

External Links

United States Association for Energy Economics (http://www.usaee.org).

International Monetary Fund (http://www.imf.org).

The World Bank (http://www.worldbank.com).