An economy is a system of the distribution, production and exchange of goods and services, by various producers and consumers, in relation to the market. In simple terms, it is defined as ‘a social community that define the practices, discourses, and physical symbols associated with the production and utilization of goods and services’. Economies provide the foundation of societies, since it is the system through which the exchange of goods and services takes place. In addition, economies also give way to prices, wages, debts and all the other aspects that shape how people manage their resources. The concept of economics has taken on universal significance, because it has been proven that the well-being of individuals and society as a whole depends on how well the system of economy functions.
Economists have attempted to categorize the economy into various categories. On the most basic level, they could define it as the set of interacting economic processes in a given nation or region. This is usually referred to as a national economy. Interacting economic processes are interrelated in such a way as to constitute a complete economic structure of the nation or region. In more technical terms, these processes also involve prices and transactions involving the producers, suppliers, workers and other economic participants.
A second type of the economy refers to the system of private property. Private property refers to items produced or owned by an individual or group, individually or collectively, in their own possession. A third type of economy refers to the system of exchange based on the production and exchange of specific goods or services, where there is no interference by government regulation or intervention. These three types of the economy can be further classified according to the extent to which they involve physical processes and activities, and the extent to which they are localized.
The physical processes and activities covered by the economy include production and distribution of tangible goods. Examples of such tangible goods include manufactured goods, construction materials and vehicles. Distribution includes the movement of these goods through different channels, including transportation, retail and production. Labor is also included here, as the definition does not require the presence of any human being.
A local economy on the other hand, is defined as a local economy that is established by its residents. A typical example of a local economy in developed countries is the local grocery store. In such an economy, local producers sell locally produced goods in the stores that are within the vicinity of the store. This is a micro-economy because the producers do not have access to international markets, but they still participate in the local market for the purpose of generating income.
The third type of global economy is called the World Economy. The World Economy is a term that was first used by Richard Cantillon in 1947. The World Economy as a whole, but not restricted to the world economy, covers the whole planet since its creation. The elements of a World Economy are capital, labor and technology. The elements of a micro-ecology are species, location and climate.