In an agricultural economy, most people can grow their own food and depend on the land, not on others.
Economic interdependence is a system in which one part depends on other parts for resources, such as food and minerals, for convenience or for daily life. This system often affects many layers of society, including countries and regions, individuals and companies. One of the reasons for economic interdependence is specialization, because most people in a society will not be able to obtain resources without specialized knowledge and equipment. The main problem with economic interdependence is that if one party cannot obtain resources, the other parties will suffer.
In a society managed by economic interdependence, most entities are largely financed by other entities. For example, in an agricultural economy, most people can make their own food and depend on the land, not on others; With interdependence, most people are unable to grow food and rely on farmers, grocery stores, and other entities to provide them with food. Work is divided in such a way that most people work to provide a service or resource to other entities, but people rarely work to directly source a specific service or resource.
Societies with economic interdependence often experience this interdependence on many levels. People depend on other people and companies to provide them with the resources they need. Companies depend on other companies, and sometimes on other countries and regions, to create a product or obtain resources. Entire countries and regions may depend on other countries and regions for resources. Some entities in this company may be independent, but most are not.
One of the main reasons for economic interdependence is specialization. For example, if a company specializes in making gold jewelry, it usually cannot source gold on its own. Instead, it’s up to the people (miners and other businesses) to get the gold they need to finish the product. This is beneficial to the business because while it needs other entities to exist, the business can focus on specializing in one service or product rather than having to rapidly expand and dominate many services to meet the needs of its core product.
The problem with economic interdependence is that each entity is completely dependent on other entities. If one entity cannot obtain funds, the other entities will not be able to terminate their service or product. When a company cannot obtain an essential resource, such as food, it can cause people to starve; at best, such a failure may simply result in an inconvenience, such as a lack of new jewelry.