Centrally Planned Economy: Definition & Features

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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.

Centrally Planned Economy: Definition & Features
Centrally Planned Economy

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.
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