There are many different economies in the world today. In each of them there is a mass of positive and negative traits. But the progenitor of all is the traditional economic system. It is still used in some third world countries. But in developed and developing countries, this system has long been transformed into a more complex one.
The traditional economic system is a situation in a country characterized by a high demand for manual labor. Moreover, in the countries in which it is used, various technologies are rather poorly developed. A large role is given to such an industry as mining and primary processing. In these countries, there is such a thing as a multi-layered economy. This means that various economic forms have been preserved, characterized by the collective management of all types of industries. That is, in countries where the traditional economic system exists, there are many small farms that produce and then sell their own products. A similar economy can also be distinguished by the presence of a huge number of craft and peasant farms. In order for the transformation of this economic system into a better one, an infusion of foreign capital is necessary. This is due to the fact that the level of entrepreneurship in third world countries is quite low.
In more backward countries, the traditional economic system is expressed in a simplified form. Various problems are solved in accordance with customs, caste or tribal traditions. In such countries, religion plays a large role. Representatives of the authorities in this case are spiritual figures. The economic life of the country can also be controlled by feudal lords, leaders, councils of elders. For example, if some tribe is engaged in agriculture, then it is used to positioning itself on this side of the activity. Most likely, over the next several decades, this tribe will continue to be engaged in agricultural activities. And none of the participants in this process would ever think to ask questions:
- Is it profitable for the tribe to engage only in agriculture?
- Maybe it’s worth mastering some other area of activity?
- Do I need to include any new technology in the production process?
Countries in which there is a traditional system, of course, are gradually developing. But the pace of economic change in them is so slow that it will take more than a decade to introduce, for example, new technologies. And then, these transformations will be caused by external influence. For example, a proposal to increase productivity using special machines. Thus, within the tribe, there may not be any changes in the activity at all if it is not influenced from the outside. 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 in Africa and Asia. There are still signs in developing countries.
In more developed countries, the state deals with the distribution of national income. Having concentrated the budget in its treasury, it allocates money for the development of infrastructure and social support for the poor. The state also deals with other key issues in the country.
If a country seeks to develop, then it will not be able to support the traditional system. Gradually, the economy becomes more complex and perfect. Not a single country in the history of mankind has been able to maintain the old system. An example is the collective ownership of the USSR. For 70 years, the government tried to maintain a traditional system, but we all know that this experience was unsuccessful. And the USSR transformed its economic system into a market system.