LovesTheTeam.com

What is the traditional economy?

In the traditional economic system, the basicthe role is played by traditions, customs and rituals. They regulate production, consumption of goods. Usually such a system occurs in underdeveloped preindustrial countries. The command-administrative and market economic systems are considered more developed. The economic role of a person depends on the hereditary position, on belonging to this or that class of society. Technical innovations do not correspond to traditional understanding, they threaten the constancy of the social system. Because they are not welcome. On the first place in the traditional economy are religious values. Manual labor and all kinds of backward methods of production are widely used. Owners are separate farms. Each of them has the right to dispose of his own resources by his own will. Owners can unite with others, sell them their resources or offer their ability to work. In countries with a traditional economy, peasants and handicrafts play an important role, while the descendants inherit the occupation of their ancestors.

Weak points of the traditional economic system

Given a high birth rate in such a countrythe risk of poverty increases. Therefore, the state has to give a large part of the national income for social support and infrastructure development. Foreign capital is very important. In countries with a traditional economic system, there are usually basic traditional resources that are used to solve economic problems. For example, coffee in Brazil. This system is stable, which makes it incapable of active changes and progress. The standard of living remains quite low. Income in such a country is distributed unevenly. There is a big gap and contrast between different layers of society. Politics and the economy are unstable, high inflation, a significant external debt. The economy is highly dependent on the public sector. Prices for non-competitive goods, natural raw materials are used inefficiently. Typical illiteracy of the population, a small number of qualified specialists, unemployment. But if a country with a traditional economic system turns away from its customs, perestroika will take a very long time. This has been proved by the experience of a number of countries that were forced to do so under the influence of the colonialists. Such changes have not yet led to an increase in the standard of living in these countries.