Introduction
There are currently 2 main types of economic system, being the Free and Planned market economy. Adam Smith founded the idea for the Free market economy being that it was a type of economy with minimal interference from the government and controlled freely by a supply and demand-based market. A planned market economy was founded by with the idea of communism by Karl Marx and the government mainly had control on factors such as what is produced, the quantity, who produced it and how much they were paid etc. (Crash Course). Most countries have adopted one of these systems and two of these countries that show the clear contrast with them are the Netherlands and Venezuela. In this comparison we will compare the economy of the Netherlands and Venezuela.
The Netherlands lies in Northern Western Europe and has a population of 16,938,499 million, while Venezuela lies in Southern America with a population of 31,977,065 million. The Netherlands has a GDP of 826,2 billion USD compared to the GDP of Venezuela which has half the amount at 482.359 USD. Even though Venezuela has double the population it has half the GDP. The Netherlands is a high-income country while Venezuela is a lower-middle income country. One of the reasons that the Netherlands GDP is higher than Venezuela is the geographical difference. The Netherlands is located in Europe and is part of the European Union and benefits from the free trade around the Europe, support from the EU and the other benefits that it offers. The Netherlands is also surrounded by many economically stable countries and has access to free trade with them without taxes (Venezuela Analysis). Venezuela on the other hand has no major trade deal with its neighbouring countries and its neighbouring countries are also developing countries and have a high tax for all the Venezuelan products that they import. The different population densities also play a major part in the difference in GDP. Venezuela has a higher population than the Netherlands, but the Netherlands has higher literacy rate and a much higher HDI and has more universities for people to seek further education, meaning that the people can seek get better jobs and a higher salary increasing the GDP (World Bank). The Netherlands has free and better health care and free primary school, leading to a higher HDI, compared to Venezuela where health care and school are expensive and government funding isn't targeted on making it accessible to citizens. The economic system of the Netherlands is an open market economy making it more suitable for investors and having a more diverse range of products. Venezuela has a planned market economy with less options and the economy being controlled by the government leaves less development for the private sector. The GDP of Venezuela is highly dependent on Oil, whereas the GDP of the Netherlands has a more diverse GDP and in an economic crisis can recover well because they produce many products. From the statistics and the economic system in place in the Netherlands, they clearly have the stronger economic system and higher GDP and are more resilient to economic disasters compared to Venezuela. Comparing the economical statistics, the Netherlands is clearly ahead of Venezuela which shows that the Netherlands economic system works effectively. While one might argue that the Netherlands have the better economic system and better economic plan, Venezuela's planned economy is controlled heavily by the government and in the research showed, that the people were satisfied with the prices of the products before the inflation rates, because the prices were set by the government and there were no major competitors to run against the monopoly companies (BBC). The planned economy of Venezuela in the view of some is effective as without a supply and demand market, there are no excess products, and the amount made is equivalent to what the users need. No excess products means also less pollutants produced from producing the products making it more eco friendly. However at the end of this discussion, there are benefits and limitations from both types of economies and how the countries implement them but in this specific example, it is clear that the Netherlands free market economy has some clear advantages over the planned market economy in Venezuela.
The Dutch economy and the economy of Venezuela are quite different, for stares the Netherlands uses a mixed economy system when Venezuela has a strictly closed economy, this is also why the Netherlands has a better economy in a lot of ways, this doesn’t mean that the economy of Venezuela is awful, it just means that the 2 economies are differently handled, the GDP of venule is 482.359 billion usd, that is almost the half of the Netherlands! And the population of Venezuela is almost twice as big as the population of the Netherlands, this can be because of the tourism difference, in the Netherlands there are about 18,000,000 million tourist every year on vacation to the Netherlands, while Venezuela only has around 700,000 tourist every year. of the Dutch economy. but one of the biggest differences between these 2 countries' is the GDP per capita, the GDP pe capita of the Netherlands is 52,200 usd while Venezuela is around 15692 usd, this is less than 1/3 of the GDP per capita of the Netherlands! Of course part of this reason is because the Netherlands lays in western Europe which is one of the richest regions in the world, while Venezuela lays in south-America which is one of the poorest regions in the world, so it shouldn't be fair to say that their equal to each other, you can also see that the healthcare in the Netherlands higher results show, and that GDP% steadier is in the Netherlands, this can be because the trade partners of Venezuela are also poor, while all the trade partners of the Netherlands are quite wealthy, but it can also has something to do with the GDP per capita of the Netherlands which shows that every person in the Netherlands on average earns more then 3x the amount that the average Venezuelan earns. he Netherlands also has a better education system with a higher adult lliteracy rate, this can also be a reason for why the Netherlands has a lower unemployment rate more than half that of Venezuela, a big part of this can be because Venezuela did not recover well from the finical crisis, while the Netherlands has done a really good job on getting back on track, Venezuela has one thing the that the Netherlands doesn’t have, a lower dept% with them only having around 23% and the Netherlands has 61% which is almost 3x more than Venezuela! Part of these reason is because the Netherlands has an easier time asking for a loan, for example to the European union, while Venezuela needs to go quite far to get money from a different region. The government in the Netherlands has also spend way more money on their country then Venezuela has done, the Dutch movements gives around 5x as much money a year to their country then Venezuela does, this is weird seeing that the GDP of Venezuela is only the half of that of the Netherlands. The Netherlands invest a part of this money to their economy and this is probably one of the biggest reasons why the Netherlands has a better running economy then Venezuela.