What Is An Economy?

A country’s economy refers to the ways in which production, processing, distribution, consumption and investment are arranged and managed. An economy is generally defined as a sphere of interaction, the production, processing, distribution, consumption and allocation of products and services, by various agents. In simple terms, it can be said that an economy is ‘a community of interacting economic activities’ or rather ‘a system of interacting economic systems’. The concept of economy has occupied the minds of numerous intellectuals, economists, sociologists, political scientists, engineers and other interested parties. Since time immemorial, the idea of economy has been recognized and has had various applications both in the domestic as well as in the international field.


As far as the analysis of an economy goes, there are three basic categories of economies. The first one is called the Steady-state economy. This type of economy enjoys economic growth and has a level of inflation; however, the level of growth is considered to be appropriate and proportional to the level of consumption and investment. The second category of economies is called the Systemic Economy. In this case, growth in the economy depends on the accumulation of capital, on increasing productivity, on enhanced technology, on government policy and on international trade.

The third category, which is perhaps the most interesting in the sense that it involves a mixture of economies, is called the Hybrid economies. These economies experience growth, but are capable of increasing or decreasing the rate of growth depending on the condition of the environment. In this respect, they appear to be something like rent-operated or for rent-to-own economies. It is also worth noting that the term economy has been used since the time of Ancient Greece, when the term economy was used to define the taxation system of that era.