Purpose of the traditional economic system

Infokekinian.com – The traditional economy is one of the economies where the purpose of this traditional economy is to meet the necessities of life through dependence on natural resources.

Of course, as a millennial generation, they are no strangers to today’s modern economic system. However, did you know that there are still many entrepreneurs in Indonesia using the traditional economic system?

What exactly is a traditional economic system? According to his understanding, the economic system is an economic system in which economic activities are carried out with the aim of satisfying the needs of life by doing things according to the traditions from generation to generation.

Characteristics of a traditional economic system

Compared to other economic systems, this economic system is also the simplest monetary economic system.

The people in this economic system are constantly dependent on natural resources and human labour. The method of exchanging goods with the previous generation is still used, but this is done through barter.

In addition, in a traditional economic system, society functions as a producer and consumer.

In this case, the transaction process is still based on barter or the exchange of goods. The government’s role in the implementation process is purely that of overseer.

The state does not participate in this traditional economic process either.

Characteristics of a traditional economic system

It is not difficult to recognize this economic system. Why? Because the way is still very easy,

The fact that this is a traditional economic system can be seen from the characteristics. This economic system has the following characteristics:

  1. People using this economic system do not use money as all transactions are still settled through barter.
  2. The state does not directly participate in various activities of this economic system, but only in maintaining order.
  3. The manufacturing technique is still very simple and passed down from generation to generation.
  4. The economic activities carried out still preserve the traditions and culture of the community.
  5. The type of production still depends on the skills and needs.
  6. Since everything is done independently, there is no clear division of labor.
  7. Where this economic system is operated as a mutual aid effort, community relations are already kinship.

Advantages and disadvantages of traditional economic systems

This economic system, like any other, has its advantages and disadvantages. Below are the pros and cons of this economic system.



The following are the advantages of the traditional economic system:

  1. Individuals in society have very strong relationships because they continue to help each other.
  2. Economic activity is also practiced honestly, because the aim is to satisfy needs and not to make a profit.
  3. There is no economic inequality between rich and poor as incomes are more evenly distributed.
  4. The government only monitors so the government doesn’t monopolize the economy.
  5. Other economies often face inflation, rising unemployment, and other problems that traditional economies are unaware of.


This economic system has both advantages and disadvantages. The following are the weaknesses of this economic system:

  1. This economic system is developing rapidly.
  2. Because this economic system still relies on nature, it cannot meet every need of every human being.
  3. Due to the low competition in the market, the quality of the goods available in the market is lower and development is more difficult.
  4. Since people’s mindset is still very negative, change is still considered taboo.

Countries using traditional economic systems

Perhaps you are thinking about what would happen if this economic system did not exist. It may still exist, but only in rural communities.

Countries using traditional economic systems

However, did you know that several countries still use this economic system to regulate their country’s economy?

Do you want to know which countries implement the traditional economic system? Let’s look at everything in detail below:

  1. One country that still uses this economic system is Indonesia. However, only remote and rural areas where access is still difficult are used. Some of these areas include Papua, Nduga and others.
  2. Most villages in Central Africa still use this economic system. These communities include Mobaye, Mbaiki, Batangafo and others.
  3. Malawi is the poorest country in the world. The country’s economy is entirely based on agriculture. Even transactions that are carried out in the barter process.
  4. Ethiopia is also one of the poorest countries in the world. Agriculture is also important to the country’s economy.


This is some information about the goals of the traditional economic system that is very interesting to discuss and in this modern era there are still countries that use this economic system. This is to show that this economic system has not completely disappeared.

Hence the article on the purpose of the traditional economic system, and don’t forget to keep visiting the Infokekinian website.

Because we also have a lot of other information and recommendations that will of course be useful and help current friends.

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