A traditional economy is a system where traditions, customs, beliefs, and inheritance determine how a society answers basic economic questions about what to produce, how to produce it, and for whom to produce it. Traditional economies are typically found in rural, non-developed areas and rely on customs and subsistence farming rather than modern technology. Economic activities focus on family or ethnic units, with little surplus produced beyond what is needed for basic survival.

2. Traditional Economic System
• A traditional economy is a system
where traditions, customs, belief
systems, and inheritance determine
the answer to the three economic
questions.

4. Examples of
Traditional economies
• Australian aborigines

5. The Mbuti in Central Africa

6. The Inuit of Northern Canada

7. 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.

8. 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

9. 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

10. Advantages of
Traditional economy
• There is little to no
uncertainty
• Everyone knows what
role to play
• Life is generally
stable, predictable,
and continuous

11. Disadvantages of
Traditional economies
• Tend to discourage
new ideas and new
ways of doing things
• Lack of progress
lowers standard of
living

12. Traditional Economies
• Basic economic
questions answered
by what has been
done in the past
• Traditions are
maintained
• Ritual, Habit, and
Custom

13. 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