Traditional economic system, its features

Today there are many different economic systems in the world. In each of them there is a mass of positive and negative features. But the progenitor of all is the traditional economic system. It is still used in some countries of the third world. But in developed and developing countries, this system has long been transformed into more complex.

A traditional economic system is a situation in a country characterized by a high demand for manual labor. At the same time in the countries in which it is used, various technologies are rather poorly developed. A major role here is assigned to such an industry as the extraction of minerals and their primary processing. In these countries there is such a phenomenon as the multistructure of the economy. This means that various economic forms are preserved, characterized by collective management of all types of production. That is, in countries where there is a traditional economic system, many small farms that produce and then sell their own products. Such an economy can also be distinguished by the presence of a huge number of handicraft and peasant farms. In order for the transformation of this economic system into a more perfect one, it is necessary to infuse foreign capital. This is due to the fact that the level of entrepreneurship in the third world countries is quite low.

In more backward countries, the traditional economic system is expressed in a simplified form. Various problems are solved here in accordance with customs, caste or tribal traditions. In such countries, religion plays a big role. Representatives of the authorities in this case are spiritual leaders. The economic life of the country can also be managed by feudal lords, leaders, councils of elders. For example, if a tribe is engaged in agriculture, then it is used to position itself from this side of the activity. Most likely, for several decades, this tribe will continue to engage in agricultural activities. And none of the participants in this process will not come to ask questions:

- Is it profitable for a tribe to engage in agriculture only?

- Maybe it's worth learning some other field of activity?

- Do you need to include any new technology in the production process?

Countries in which there is a traditional system, of course, gradually develop. But the pace of economic change in them is so low that the introduction, for example, of new technologies, will take more than a dozen years. And that, the conversion data will be called the external effect. For example, the proposal to increase productivity with the help of special machines. Thus, within the tribe, there can be no change in activity in general, unless it is influenced externally. An example of such a situation can be the peoples of the Far North in Russia. They still live in the traditional system - they are hunted by the tribe.

Now the traditional economic system is prevalent in some countries of Africa and Asia. There are still its signs in developing countries.

In more developed countries, the state deals with the distribution of national income. It, having concentrated in the treasury the budget, allocates money for development of an infrastructure, on social support for poor layers of the population. The state also deals with other major issues in the country.

If the country seeks to develop, it will not be able to support the traditional system. Gradually the economy becomes more complex and perfect. No country in the history of mankind could keep the old system. An example is the collective property of the USSR. The government tried to maintain the traditional system for 70 years, but we all know that this experience was unsuccessful. And the USSR transformed its economic system into a market one.