The economic system that was established in this town can be considered as a traditional economy because it is based on the traditions and customs of the population.
What is the traditional economy?
The traditional economy is a term that refers to a type of economy that is characterized by being simple, and whose decisions are based on tradition.
- It is characterized to solve the basic problems of the economy: what, how and for whom to produce.
- They make decisions that were successful in the past, that is, their survival will depend on whether the decisions of the past were correct.
- They have a small economic surplus, so they will not be able to invest in improvements to the production process.
- They are low-income societies, and they will depend on aid and loans from rich nations.
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