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Discover how a command economy operates, its characteristics, and its impact on production and pricing, with examples from Cuba and North Korea./command-economy-characteristics-pros-cons-and-examples-3305585-FINAL-5ba5027946e0fb00504d5fba-5bc8e9f1c9e77c002d83f076.png)
What Is a Command Economy? Kimberly Amadeo has 20 years of experience in economic analysis and business strategy. She is an expert on the U.S. and world economies. Hover over each country to see its 2021 Index of Economic Freedom score.
In a command economy system, it is not the free market but the government that makes important decisions like which goods to produce, what amount of these goods to produce, and how much they cost. The government also makes decisions about incomes and investments.
A command or planned economy occurs when the government controls all major aspects of the economy and economic production. In a command economy, it is the government that decides what to produce, how to produce goods and how to distribute goods and services within the economy.:max_bytes(150000):strip_icc()/views-and-people-of-havana--cuba-638305386-5c738c83c9e77c00010d6c41.jpg)
In a command economy, the government determines what goods and services will be produced and how they will be sold according to a multi-year central macroeconomic plan.