Economic System And Traditional Economic Systems

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Each and every country or nation in the world has what we call the economic system that it uses. With economic systems countries are able to three central economic questions. What to produce? How to produce? For whom to produce? However each of the four economic systems is different from the other which results in economic system having characteristics of their own. The main characteristics of the economic systems are ownership of resources or factors of production and also the level of role played by the government. These are important things to consider when analysing the economic systems because they are the driving force behind every system. Scarcity is the reason countries are faced to answer the three central economic questions, since the factors of production are limited in every economy. The systems not only provide answers to the three questions but they also have their consequences that come with each one of them in their usage on the economy. We can that they have advantages and disadvantages or pros and cons. Their usage also has a different impact on the economy. We will start by analysing the traditional economic system, one of the four systems that will be discussed. TRADITIONAL ECONOMIC SYSTEM The traditional system is easiest to understand and very surprising, it makes one ask why we even had it as an economic system. The system uses the application of old methods from generation to generation. This means that same production and distribution of goods remains the same from generation to generation. This argument is supported by Mohr and Fourie(2008:26) the traditional system is mainly about traditions, customs and beliefs. Countries that use this type of system are often rural and farm-based. It is that some unde... ... middle of paper ... ... supported financially by the government to start their own businesses. The Small, Medium and Micro Enterprises (SMME’s) have increasingly came to play a role in South Africa’s economy and development. It is said that the SMME’s are responsible for the large percentage of job creation in South Africa. If the South African government could put more money in the SMME’s that will not only decrease unemployment but also the economy will grow. Everyone will get to benefit because as the SMME’s start to grow into large businesses they will pay large amounts of tax because of the profits they will be making. This will enable the government to get more revenue in to provide public goods and services that are needed and also build new infrastructure. South Africa has a lot of potential it’s up to the government and the businesses to take our economy to where it can get.

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