In its simplest description, an economy is the activity of people exchanging things amongst themselves using money as an intermediate medium.

If this economic activity of exchanges is to be regulated, measured, or promoted, then its extents, including the people involved in it, must be defined. Such a defined economic system is an economic community. The members of an economic community cooperate in a coordinated way for a shared economic purpose, which gives that economic community some degree of separation from other economic communities. An economic community may be the whole Earth (the global economy), a group of countries, an individual country (a national economy), a shopping centre, town, city, or a region. Even smaller units, such as families or social clubs, may be considered to be an economic community.

Economic community usually trade with each other; however, different economic communities are closed off from each other to varying degrees. The global economy is completely closed, as it trades with no external economic community at all; other economies have varying degrees of openness or closeness. Some, such as the economies of North Korea or the now-defunct USSR are relatively closed due to restrictions imposed by their own or other governments; others, such as isolated tribal group, are relatively closed because of geographical restrictions. Other economic communities, such as a suburban shopping district, are relatively open and trade very freely.

If an economic community becomes very open it may become meaningless to consider it as separate from the economic communities that it trades with. If so, they will effectively merge into one economic community. This is progressively happening globally as a consequence of globalisation of trade.

This page is linked from:

decoupling the economy from resource use

decoupling with a service economy

economic instability  

Agree? Disagree? Make a comment!  (Comments are moderated)