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, nondeveloped 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