A traditional economy is an economic system based on the traditions, customs, and beliefs of a people. These traditions dictate the types of goods produced, the system of trade or barter and the manner of distribution. This system is used in communities where tradition and customs are often more important than the accumulation of wealth, progress and expansion. In most cases, the people are most often rural and agrarian, and the goods are typically produced by crops. Manufacturing is limited to craftsmen who provide the tools of trade and minimum household items.

There is typically no factory style of production, and farms are typically family owned and run. Changes comes slow, and the government is usually concerned with keeping the traditions of the people and are not tolerant of changes, even those that might improve the quality of life for its people.