Centrally Planned Economy: Definition & Features

Centrally Planned Economy: Meaning & Definition

A centrally planned economy is an economic system in which economic decisions are made by the government of a country through a central economic planning bureau. It is also called a command economy and is associated with a socialist or communist economic system.

Features of Centrally Planned Economy

• Government control of the economy is absolute.
• Resources are owned by the government on behalf of the people.
• The aim of production is to maximize public welfare and raise the general standard of living.
• The prices of goods and services are fixed by government.
• Economic decisions are made by the government.
• Little or no individual economic freedom exists.
• Labour is adequately engaged in productive activities.
• Equitable distribution of income is ensured.
• There is lack of unhealthy competition in the system.