economic activity

The production and distribution of goods and services to satisfy the wants and needs of consumers and other businesses. The many different activities that lead to the production of these goods and services are grouped into three broad categories – primary industry (extraction of raw materials, such as mining), secondary industry (manufacturing and construction), and tertiary industry (services). Recently, a fourth category has been added to these divisions, namely, ‘quaternary industry’, which includes the high-tech industries using computers and microelectronics, particularly those processing information.

In addition to the extraction of raw materials directly from the earth or sea, primary industry includes farming, fishing, mining, and forestry. Secondary industry, which covers the processing of raw materials and the manufacturing of goods, is subdivided into heavy, light, and footloose industries. Heavy industry involves the production of large, bulky items and includes activities such as steelmaking and shipbuilding; light industry covers products that are lightweight relative to their monetary value, such as watches and jewellery; while a footloose industry is one that is not tied to a particular place by factors such as raw materials or processing, but can be sited anywhere. The best location for an industry depends on many factors which vary according to the end product; these factors can be broadly divided into physical, human, and economic considerations. Physical factors include location and availability of raw materials, power and energy supplies, and a suitable processing site; human and economic factors include size, location, and availability of markets, transportation, and an adequate labour force (people available for work). Tertiary industry provides a service rather than a manufactured product, and includes areas such as government employment, banking and insurance, health and social welfare, shops and catering, garages and transport systems.

Development economics The study of the history and changes in economic activity and organization over a period of time is called ‘development economics’, and is one of the three major divisions of economic studies – the other two being macroeconomics and microeconomics. Development economics examines the attitudes and institutions supporting economic activity, as well as the process of development itself, and also includes the factors responsible for self-sustaining economic growth and the extent to which these factors can be manipulated by governmental policy.

State intervention All organized communities mix, in various proportions, market activity and government intervention. The degree of competition under which private markets operate can differ widely – from single-firm monopolies, to the fierce rivalry engendered by the presence of many operators in any one field. Similarly, there can be wide differences in the degree of government intervention which can range from tax, credit, contract, and subsidy policies in a free-market state to the enforced central planning and controls of communist regimes.