traditional economy
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Traditional EconomyTRANSCRIPT
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Traditional Economic System
• A traditional economy is a system where traditions, customs, belief systems, and inheritance determine the answer to the three economic questions.
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Examples of Traditional economies
• Australian aborigines
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The Mbuti in Central Africa
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The Inuit of Northern Canada
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Traditional Economies¨ Traditional economies are found in rural, non-
developed countries (approx. 400 million practice it)
¨ Customs govern the economic decisions that are made
¨ Modern technology is not used in traditional economies.
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Traditional Economic Systems• The economy works through bartering and
trading, and there is very little of that because so little surplus is produced.
• Traditional economic systems are usually based on subsistence-based agriculture
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Traditional Economies
¨ Economic activities are usually centered toward the family or ethnic unit; most produce only enough to keep their families alive.
¨ Little surplus exists
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Advantages of Traditional economy
• There is little to no uncertainty
• Everyone knows what role to play
• Life is generally stable, predictable, and continuous
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Disadvantages of Traditional economies
• Tend to discourage new ideas and new ways of doing things
• Lack of progress lowers standard of living
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Traditional Economies
• Basic economic questions answered by what has been done in the past
• Traditions are maintained
• Ritual, Habit, and Custom
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Traditional economies• Individual roles and
choices are defined by the customs of elders and ancestors
• These economies are usually based in societies of hunter/gatherers
• Sharing is a big part of these economies