Traditional economy

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A traditional economy is an economic system in which resources are allocated by inheritance, and which has a strong social network and is based on primitive methods and tools. It is strongly connected to subsistence farming. Most countries that have historically had a traditional economy have replaced it with a command economy, market economy, or mixed economy. However, it is still found today in underdeveloped, agricultural parts of South America, Asia, and Africa.

1 Advantages
2 Disadvantages
3 Important Information (Summary)
4 See also
5 External links

Advantages

Traditional economy fosters a sense of community, as it causes little friction among members and provides a sense of security and psychological comfort. Subsequently, there is a relatively low unemployment rate and low crime rate. A traditional economy allows for a greater degree of autonomy and little or no money is used.

Disadvantages

A traditional economy does not allow for much economic growth and development as changes are very slow and little social mobility. A traditional economy does not take advantage of technology and there is relatively little promotion of intellectual and scientific development. A traditional economy provides few incentives for entrepreneurs, thus limiting choices for consumers and lowering standards of living.

Important Information (Summary)

A traditional economy is where people produce most of what they need to survive.Hunting and gathering, farming, and herding cattle are the bases of traditional economy. People hunt for the food they eat or raise it themselves. Often they make their own clothing and tools. If they produce more food than they need, they trade the surplus, or extra food, for goods made by others.