What Countries Have a Planned Economy?
North Korea, Cuba and Zimbabwe are countries that have planned economies. The largest country to have a planned economy was the Soviet Union. A planned economy, or a command economy, involves near-total government control of industries, commerce, manufacturing, output and economic activity. A large portion of a country’s gross domestic product comes from government programs in a planned economy.
Zimbabwe’s government spending, as a percentage of the country’s GDP, is 97.8 percent. That means nearly 98 percent of Zimbabwe’s economic activity is due to government funding. Cuba’s government spending as a percentage of GDP is 78.1 percent. North Korea’s economy is almost completely based on the government’s military spending.
In a command economy, the government controls production levels, prices, wages, reallocation of resources, trade and commerce. When production levels are set, the government proscribes how many people must work to achieve that output level. Once the finished products are sold, the government reallocates the money to go towards whatever projects it deems necessary.
A planned economy is the exact opposite of a free-market economy. Most countries are mixed economies with a certain percentage of a nation’s GDP from government funding. By comparison, the U.S. government is responsible for 38.9 percent of the country’s GDP.