Top 5 Main Features of Mixed Economy

A mixed economy is characterized by the following features:

1. Co-existence of public and private sectors:

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Both public and private enterprises exist in this economic system. The role and areas of both the sectors arc well defined.

The relative roles assigned to the public and private sector differ from economy to economy. But generally the public sector is expected to perform certain basic functions such as:


(i) Development of economic infrastructures.

(ii) To promote basic industries that require huge investment and are of long gestation periods;

(iii) To promote industries in backward regions where inducement to invest is low.

(iv) To develop defence production industries in public sector.


Similarly, the private sector is expected to supplement the efforts of public sector and to take advantages of investment opportunities enhanced by public enterprises.

In the mixed economy the two sectors are not rivals. The two sectors are partners in the process of development, because for the efficient working of this system the co-operation between the two sectors is necessary.

The private sector in mixed economy operates under certain controls and regulations of the government.

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2. Economic planning:

Generally a mixed economy is a planned economy. Public sector enterprises have to work according to a definite plan to achieve certain predetermined aims and objectives. Similarly the private sector is not left to develop in its own way.


The growth of private sector is also regulated through various controls and incentives to achieve the objects of plans.

Thus, the nature of economic planning in mixed economies is ‘planning by direction’ for the public sector and for private sector ‘planning by inducement’ is adopted’.

To ensures faster economic growth, the developmental programmes of both the sectors are coordinated in such a way that growth in one sector complements the growth in the other sector.

3. Division of industrial undertakings:

There is division of industrial enterprises in a mixed economy. The division of industrial sector may differ from economy to economy. Generally, the industrial economy is divided into following:

(i) Exclusively State Monopoly. In it same strategic and basic industries are included.

(ii) Private Sector Industries. In it industries of lesser importance are included such as consumer goods industries, small scale industries, etc.

(iii) Joint Sector Industries. The industries included in this sector are developed jointly by public and private sector.

(iv) Common Industrial Sector. Both public and private sector can establish industrial units in this sector.

4. Existence of social welfare and private profit motive:

In mixed economy public sector works as the principle of social welfare motive. Public sector tries to reduce regional economic inequalities and to increase employment opportunities.

The basis of price policy of public sector is social welfare instead of private profit. Whereas the operations and price policy of private sector is guided by private profit motive.

But the private profit motive is controlled by government through fiscal and monetary policies, direct controls, etc.

5. Individual freedom:

The people have freedom of consumption and to choose their occupations in this economic system. Private entrepreneurs are to choose technique of production.

From the above discussion, it is clear that mixed economy is a marriage between capitalism and socialism.

It is an attempt to have the merits of both capitalism and socialism Therefore, it is said and rightly too that mixed economic system a golden path between capitalism and socialism.


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