Principles of Economics
Components of Economy
Human activities which generate income are known as economic activities. All the economic activities are classified into three categories viz. primary, secondary and tertiary. Activities that are directly associated with environment are known as primary activities as they refer to utilization of natural resources like land, water, vegetation, minerals etc. When primary goods are used to produce some other articles or commodities, either manually or by machines, then this activity is known as secondary activity. For both primary and secondary activities, we require a substantial amount of support services which are known as tertiary activities.
People engaged in primary activities are called red collar workers due to outdoor nature of their work. Agriculture, fishing, live-stock rearing, mining are some of the examples of primary activities. In most of the developing countries including India, primary activities still provide substantial earnings especially in rural areas. These activities are important as they provide livelihood for the human beings and are backbone of industry as most of the raw materials are provided by them. Many countries in Africa and Asia and some parts of Europe and the USA are heavily dependent on this sector for economic development.
These activities add value to natural resources by transforming raw materials into valuable and useful products. Secondary activities, thus, are concerned with manufacturing, processing and construction (infrastructure) industries. Thus, there is some mutual dependency between primary and secondary activities. Secondary activities, thus require human skills, technology, funds, mechanization, electricity or other form of power.
Tertiary activities are related to the service sector. All those activities which provide support to primary and...
Please join StudyMode to read the full document