Traditional Economy is a system where the allocation of available resources is made on the basis of inheritance. As a deep-rooted economic theory with well-built social set-up,
Traditional Economy generally makes use of prehistoric instruments and techniques.
From time immemorial, conventional and age-old human occupations like agriculture remained the focal point of interest for Traditional Economy. This is perhaps the only economic theory, which has evolved historically in certain countries. However, all nations having Traditional Economy these days, are fast switching off to more contemporary concepts like Mixed Economy, Command Economy or Market Economy, to keep pace with the modern economic trends and happenings.
Irrespective of the old approaches of Traditional Economy, the concept is still prevalent in some under-developed South American nations like Papa New Guinea and Brazil, and in a handful of other African and Asian countries.
In fact, Traditional Economy can be called as the
economy of the ingenious population of the world like the Pygmies belonging to the Congo region in Central Africa. As per a World Bank estimate, this type of economy is still prevalent among 400 million indigenous people across the world. So, it is not at all an extinct economic concept in present times.
There are of course a handful of benefits derived from Traditional Economy. It actually nurtures a feeling of unity among individuals, helping in the development of a social bond and sense within them by reducing mutual hostilities. Consequently, people feel psychologically more free, comfortable and secured, which increase their working abilities million fold. This in turn, brings down the rate of unemployment. Moreover, since the entire population is engaged in activities of some kind or the other, their mind never sit idle to plan criminal activities. Hence, there is a significant decrease in the rates of crime as well. To sum up, Traditional Economy permits people to enjoy more independence against minimum or no financial expenses.
The
concept of Traditional Economy is all about popular autonomy, where productions take place as per the demand generated. Hence, primitive human occupations like animal grazing, gathering, hunting and cultivation form the basis of this economy. However, the surplus food production is not consumed but used for commercial activities.