Function

• Economic systems are important for the function of trade around the world. While each country maintains a slightly different economic system, the overall principle of exchanging goods and services according to supply and demand is necessary for modern society.
  
  

Types

• According to Economy Watch, a financial and investment advice provider, there are three types of economic systems--a market economy, a planned economy and a mixed economy.
  
  

Identification

• The Council for Economic Education addresses the relationship between different economic systems and the status of a country. Democracies tend to have a market or mixed economy, while dictatorships tend to have a planned economy.
  
  

Significance

• Most developed countries in the world have one of the defined types of economic systems, while the undeveloped world may go through each type before deciding on a proper system.
  
  

Considerations

• The modern economic system used around the world stems from the growth of class structure from feudalism. The growth of the merchant class created a market for goods and services, giving rise to divergent theories of economic practice.