ECONOMIC SYSTEMS IN HOSPITALITY INDUSTRY

   ECONOMIC SYSTEMS IN HOSPITALITY

The hospitality sector is always thriving and robust regardless of the type of an economic system it's operating in.An economic system refers to the specific way a community,country and government has organized its distribution of the key factors of production mainly labour,physical resources like land,capital,Information and technology,Entrepreneurs etc. Despite the unique challenges that each economic system has,the hospitality industry always finds a way to adapt and serve its customers and attract more.
   There are four most common economic systems practiced by different communities,states and communities around the world.These four are:

       a)Capitalism                                                          b)Socialism       c)Mixed System                                                    d)Subsistence/Traditional

Capitalism

Capitalism is also called free market system.Found in first world democracies such as the united states,United Kingdom,France etc. The following characteristics feature prominently in a capitalist economy.

• Very minimal government control/Very Liberated.
• Freedom of entrepreneurship.
• Prices Largely determined by market forces of demand and supply.
• Privatization of property and wealth.

Socialism

This is a centrally planned economic system where the authority or government dictates how the resources and factors of production are to be used or distributed.Cuba is the best existing example of socialism.The following are the key features of a socialist economic system.

• Communal ownership of resources
• Government/Authority determines prices for goods and services.
• Government agencies allocate resources.
• Government determines which enterprises to be permitted to operate.

Mixed Economic System

Occurs where both capitalism and Socialism coexist in distribution of resources.Its is commonly found in developing countries in Africa and Asia.The most common features are;

• Private and Public owned enterprises.
• Existence of state run facilities that offer basic needs in health,education,sanitation etc.
• Private and public partnerships in development projects/investments.
• Government intervention through regulatory bodies to safeguard public interest against exploitation by private sector.

Subsistence/Traditional Economic System

It is perceived to be the most backward system with enormous underutilization of resources.This system often lacks the key factor of information and technology.Mostly found in third world communities and states that mostly practice subsistence agriculture and wild fruits and food gathering and hunting.Although this system has hugely diminished due to globalization,spread of information and technology and emergence of multinational global companies that push direct foreign investments into least developed countries.

This economic system is characterized by;

• Underdevelopment.
• Lack of records keeping and information technology.
• Very low economic output and unskilled labour 
• Production is mostly for own or domestic consumption with less or no motivation at all for enterprising and profit making.