World Economic Systems Questions Medium
A subsistence economy is primarily characterized by the following main features:
1. Self-sufficiency: In a subsistence economy, individuals and communities produce only enough goods and services to meet their basic needs and sustain their livelihoods. There is little to no surplus production for trade or exchange.
2. Agriculture-based: Subsistence economies are typically agrarian, relying heavily on farming and cultivation of crops for sustenance. Agriculture is the primary means of food production, and often, traditional farming methods are employed.
3. Limited technology and division of labor: Subsistence economies usually lack advanced technology and machinery, relying on manual labor and basic tools for production. The division of labor is often minimal, with individuals or families performing various tasks required for survival.
4. Barter and informal exchange: In the absence of a formal market system, subsistence economies rely on barter and informal exchange of goods and services. People trade surplus produce or goods directly with others, based on their needs and preferences.
5. Traditional and customary practices: Subsistence economies are often rooted in traditional and customary practices that have been passed down through generations. These practices dictate the methods of production, resource allocation, and social organization within the community.
6. Limited economic growth and development: Due to the focus on meeting immediate needs rather than generating surplus for economic growth, subsistence economies tend to have limited economic development. The lack of surplus production and investment hinders the accumulation of wealth and the development of infrastructure and industries.
7. Close-knit communities: Subsistence economies are typically characterized by close-knit communities where individuals rely on each other for support and cooperation. Social relationships and community ties play a crucial role in the functioning of the economy.
It is important to note that subsistence economies are often found in rural or remote areas, where access to modern infrastructure, markets, and resources may be limited. These economies are typically associated with low-income levels and a high degree of self-reliance.