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Traditional Economy


Traditional Economy
Traditional Economic Activities - Definition of traditional economic system is an economic system run collectively for the common good (democratic), Traditional Economic Activities in accordance with the usual procedure adopted by earlier ancestors.

In the system of Traditional Economic Activities duty of the government is limited to provide protection in the form of defense, and maintaining public order. In other words, economic activity, namely the problem of what and how much, how and to whom the goods produced are all governed by the community.

Traditional economic system present in the lives of simple people who depend on natural resources to meet their needs. In this economic system households act as producers and consumers so that each household is only trying to meet their own needs.

In general, the economic system is applicable to countries that have not developed, and becoming obsolete. For example, Ethiopia. But in general, the economic system is very primitive and almost nothing else in the world.

The characteristics of the traditional economic system is as follows:
  • Nature is the source of life and a source of prosperity.
  • There is no division of labor in society.
  • Only a few uses of capital.
  • Type of production tailored to the needs of each household.
  • Still using the barter system in meeting their needs.
  • The process of production and distribution systems are formed out of habit or tradition prevailing in the society.
  • Maintenance of familial trait in people's lives.
  • Production techniques studied hereditary and simple.
Excess traditional economic system is as follows:
  1. Did not happen competition because of all the activities carried out by customs.
  2. Society feels very safe, as there is no heavy burden to bear.
  3. By nature kekeluargaannya, community life together.
The weakness of the traditional economic system is as follows:
  • The production is limited so people are not trying to make a profit or profit.
  • The mindset of people do not develop because due to the influence of tradition.
  • Not taking into account the efficiency and use of resources.
  • Economic activities carried out to make ends meet, not to increase the prosperity and well-being.
  • The technology used is very simple, so that the low productivity

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