We explain what economic activities are and what their phases. Also, what are the economic sectors and productive factors.
Economic activities are a fundamental part of the economy.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 company. population. In other words, it is about activities capable of generating wealth for communities, through the generation of goods or services to provide (offer) 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 encompass a cycle composed of three phases:
- Production, understood as the stage in which the raw material, through processes of different nature, to obtain products elaborated or semi-finished, 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 capitals necessary to hold the schema in the weather.
These three phases are interconnected and affect each other so that an understanding of how each occurs sheds light on the final results of the process. productive process: a low production and a high consumption rate can lead to the increase in the price of the product and its scarcity, while the opposite scenario leads to lower prices and a fall in the price. These relationships are dealt with by economists.
Economic sectors
The secondary sector provides services such as transportation or maintenance.Economic activities can be grouped into three large economic sectors, depending on their location within the productive circuit. These sectors are:
- Primary sector or basic. It 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 the same. Usually, the resources obtained in this way are destined to other industrial sectors that use them as raw materials, and that add added value along the way. Examples of primary sector activities are: farming, fishing, cattle raising, mining, oil extraction, beekeeping or forestry.
- Secondary sector or intermediate. This sector receives the raw material gathered by the previous sector and uses it for various transformation processes, that is, mechanical, physical, chemicals or of another nature, in order to obtain manufactured products, which may be goods for direct consumption, 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: manufacture, the steel industry, handicrafts, construction or obtaining electric power.
- Third sector or service sector. In this category are those non-productive economic activities, that is, 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 industries of any of the productive sectors. Unlike the two previous sectors, it focuses on the stages after production (distribution and consumption) of economic activity. Examples of activities in this sector are: repair and maintenance services, security services, lodging and hotel services, freight transport services, finance and banking, shows and entertainment, telecommunications and public services.
- Quaternary sector or sector of innovation. Finally, the quaternary sector is often referred to to refer to non-productive activities not related to the service sector, the objective of which is to contribute to the increase in the knowledge and with the improvement of Sciences and the techniques, which has a gigantic impact on other economic sectors. Examples of this sector are: scientific investigation, technological innovation, medical research, education services, consulting, financial planning, media and the cultural sector.
Productive factors
On the other hand, it is called productive factors or factors of production to the set of resources that are indispensable for the productive activity itself, that is to say, all that element that involves the production itself. These factors are classified as:
- Land factor, which represents the material goods provided by the nature, whether they are from the Earth crust, the subsoil, the flora and fauna or even the atmosphere.
- Human factor or work, which consists of the human intervention necessary to start any economic activity. In economics it is symbolized by the letter T.
- Factor capital, represented by the letter K in economics, consists of physical or real capital (that is, circulating or real estate), human capital (the workforce) and financial capital (money and / or debt capacity).