In developing agricultural societies, the most common type of economy is “subsistence economy” also known as a “traditional economy.” Here are the key features of the traditional economy system that will help you to understand this economic system in depth.
Key Features Of Traditional Economy
- Agricultural Focus: The primary economic structure of a traditional economy is agriculture. The majority of the population engages in farming, cultivating crops, and raising livestock for their consumption and survival, thus mostly practicing subsistence farming.
- Technology: In developing agricultural societies, farmers rely on traditional farming methods. They have limited access to modern agricultural technology or farm mechanization. Agriculture activities are highly reliable on labour, therefor inpot cost rises.
- Self-Sufficiency: In a traditional economy, people practice farming to fulfill the basic needs of their family or the cummunities. Only if there is production surplus, then produce is sold at the local markets for gaining profits.
- Specialization: People are not dependent on a particular income source, therefore they perform multiple activities to earn money. Hence there is a lack of specialization. People are involved in multitasking such as farming, animal husbandry, and handicrafts to fulfil their basic needs. This could also be due to small land holdings.
- Low Income: People have low income and poverty is prevalent in this society. Growth & economic development are limited due to the focus on subsistence and the lack of opportunities for diversification.
The traditional economic system is still prevalent in some parts of Brazil, Alaska, Canada, Yemen, Haiti & Greenland.