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. In the majority of countries traditional economy has been replaced by command economy, market economy or mixed economy. However, it is found today mainly in underdeveloped, agricultural parts of South America, Asia, and Africa.

[edit] Advantages

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

[edit] Disadvantages

A traditional economy does not allow for much economic growth and development as changes are very slow and there is a lack of social mobility. A traditional economy does not take advantage of technology and there is relatively little promotion of intellectual and scientific development. With no incentives for entrepreneurs, the consumer choice is diminished, which leads to a lower standard of living.