Advantages and Disadvantages of Mixed Economy

Mixed economy as the name suggests is an economy where all the activities related to production and other activities are carried out by participation of both government and private enterprises. Given below are some of the advantages and disadvantages of mixed economy –

Advantages of Mixed Economy

  1. Since mixed economy involves both government and private enterprises it has the advantage of taking the benefits of capitalist nature of private companies and socialist nature of government.
  2. There is less inequality of income because intent of government is to have a balanced economic growth of an economy.
  3. Mixed economy allows individuals to run their business and make profits but at the same time it places some responsibility on these companies by inducing them to contribute towards the welfare of society.

Disadvantages of Mixed Economy

  1. Since welfare of society is important in a mixed economy it leads to lower than optimum use of the resources because government mobilize the resources towards the production of those goods and services which are beneficial for the society as a whole rather than producing those goods and services which in economic terms are more beneficial for an economy.
  2. Under mixed economy private enterprises have to face lot of difficulty because of various government loopholes like favoritism and bureaucratic nature which is prevalent in mixed economy.

As one can see that mixed economy like socialist and capitalist economies has both advantages and disadvantages and therefore it will be always debatable whether a country should follow mixed economy structure or not.

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44 comments

  1. thanks for your fruit full clarification on the adv. and disadv. of mixed economy. please add any more tip

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