Economic environment refers to the aggregate of the nature of economic system the structural anatomy of the economy, the organisation of capital market. the set-up of industrial undertakings, the social-economic infrastructure, the economic role of the government, monetary and fiscal policies, the business cycles, the stage of economic development, the nature of factor endowment and the degree of resource exploitation.
The nature of economic system of a country is a crucial determinant of the shape and form of economic environment. The economic system comprises of various sub-systems wherein individual enterprises carry on their income-earning and income-spending activities. The nature of economic system is determined by factors such as the nature of property rights, ownership of factors of production relations, role of government planning, role of public sector, functioning of price mechanism, etc. Accordingly, the economic system of a country may be characterized as capitalist, communist, socialist or mixed economy.
The nature of economic system of a country is a crucial determinant of the shape and form of economic environment. The economic system comprises of various sub-systems wherein individual enterprises carry on their income-earning and income-spending activities. The nature of economic system is determined by factors such as the nature of property rights, ownership of factors of production relations, role of government planning, role of public sector, functioning of price mechanism, etc. Accordingly, the economic system of a country may be characterized as capitalist, communist, socialist or mixed economy.
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