On this page, we will discuss why planned economic system can have many advantages in South Africa. The content on this page is relevant for Business Studies Grade 9 and Economic and Management Sciences Grade 9 Subjects.

What is a planned economy?

A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, participatory or Soviet-type forms of economic planning.

Reasons why planned economic system can have many advantages in South Africa

  • Those opponents who challenge a Planned Economy level the criticism that, “theoretically speaking, there should be no unemployment because the Government will be employing all citizens to create goods and services for the country. In reality, this is not the case.” According to the March 2016 figures provided by Stats SA, the unemployment rate is 26.7%, which is very high – under a Dual Economy System! With a Planned Economy, the Government would purposefully employ more people, with the goal of ending as much unemployment as possible
  • Under a Planned Economy, more could be done to alleviate the problems of the poor, since the wealthier citizens would have money to see to their own needs.
  • The government would ensure that all citizens have access to basic / essential services like health care and although the quality may not always be of a very high standard, many agree that it is better than nothing. In a Free Market System, these services would be beyond the reach of the poor as they are too expensive and unaffordable.
  • Presently, SA has a Mixed Economy; there are some partially state-owned (parastatal) entities such as ESKOM, SAA etc., which are inefficiently managed. If these were placed under full state control in a Planned Economy, more focused and resolute management of the country’s resources would occur, thereby greatly benefiting the country.
  • A Planned Economy is the better solution for South Africa’s problems of inequality and underdevelopment. With systematic planning, accountability and the support of the people, SA would progress.

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