We explain what economic activities are and what their phases are. Furthermore, what are the economic sectors and productive factors.
What are economic activities?
An economic activity is any type of activity in which goods and services are produced or exchanged with the aim of satisfying the needs of a population. In other words, these are activities capable of generating wealth for communities, through the generation of goods or services to provide (supply) to a local, regional or global market of people or entities that need them (demand).
As its name suggests, economic activities are a fundamental part of the economy, and although they can be extremely diverse, varied and complex, they always cover a cycle made up of three phases:
- Production understood as the stage in which the raw material is transformed, through processes of different nature, to obtain manufactured or semi-finished products, or to obtain resources or services to offer.
- Distribution, stage consisting of delivering the goods or services produced to the marketing circuits that in turn will send them to their respective consumers.
- Consumption, understood as the final stage in which the good or service is consumed, closing the productive circuit and returning the capital necessary to sustain the scheme over time.
These three phases are interconnected and affect each other, so that understanding how each one occurs sheds light on the final results of the production process: low production and a high consumption rate can lead to an increase in the price of the product and its scarcity, while the opposite scenario leads to cheaper prices and a fall in price. Economists deal with these relationships.
Economic sectors
Economic activities can be grouped into three large economic sectors, depending on their location within the productive circuit. These sectors are:
- Primary or basic sector. This is the initial sector of the production chain, characterized by the collection or extraction of materials from the environment, through processes that may involve a lot or little manipulation of them. Usually, the resources obtained in this way are destined for other industrial sectors that use them as raw materials, and that add added value along the way. Examples of primary sector activities are: agriculture, fishing, livestock, mining, oil extraction, beekeeping or forestry.
- Secondary or intermediate sector. This sector receives the raw material gathered by the previous sector and uses it for various transformation processes, that is, mechanical, physical, chemical or other, in order to obtain manufactured products, which can be direct consumption goods, equipment for other industries and sectors, or even semi-processed materials destined for other industries in the same secondary sector. Examples of activities in this sector are: manufacturing, steel, crafts, construction or obtaining electrical energy.
- Tertiary sector or service sector. In this category are those non-productive economic activities, that is, those that do not involve the obtaining and transformation of raw materials, but are dedicated to providing services to directly satisfy the needs of third parties, whether they are final consumers or manufacturing industries. any of the productive sectors. Unlike the previous two sectors, it focuses on the post-production (distribution and consumption) stages of economic activity. Examples of activities in this sector are: repair and maintenance services, security services, lodging and hotel services, freight transportation services, finance and banking, shows and entertainment, telecommunications and public services.
- Quaternary sector or innovation sector. Finally, we usually speak of the quaternary sector to refer to non-productive activities not linked to the service sector, whose objective is to contribute to the increase of knowledge and the improvement of sciences and techniques, which has a gigantic impact. in other economic sectors. Examples of this sector are: scientific research, technological innovation, medical research, education services, consulting services, financial planning, the media and the cultural sector.
Productive factors
On the other hand, productive factors or production factors are called the set of resources that are essential for the productive activity itself, that is, all that element that involves production itself. These factors are classified into:
- Earth factor which represents the material goods provided by nature, whether from the earth's crust, the subsoil, the flora and fauna or even the atmosphere.
- Human factor or work which consists of the human intervention necessary to launch any economic activity. In economics it is symbolized by the letter T.
- Capital factor represented by the letter K in economics, consists of physical or real capital (that is, circulating or immovable assets), human capital (labor) and financial capital (money and/or debt capacity).
References
- “Economics” on Wikipedia.
- “Factors of production” on Wikipedia.
- “What is the economy and what are the economic activities we carry out?” (video) in The Cradle of Halicarnassus.
- “Economic sector” in Business Dictionary.
