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What Are Basic Industries (Explained: All You Need To Know)

Wondering: What are Basic Industries?

What does “basic industries” mean in business?

What’s essential to know?

Keep reading as we have gathered exactly the information that you need!

Let me explain to you what basic industries mean once and for all!

Are you ready?

Let’s get started!

What Are Basic Industries

In business, basic industries refer to the businesses that manufacture goods or use raw materials to create new products.

Typically, companies operating in basic industries have special know-how in being able to take raw materials and transform them or process them to create useful products for society.

Some examples of basic industries are those related to iron, steel, metals, wood, paper, milling, and chemicals.

Basic industries are responsible for producing a wide range of goods from corn, soy, and wheat, to oil, gas, and steel.

Those countries with many businesses in basic industries may export a lot of their raw material to other countries that end up producing goods that may end up back in the originating economy.

Why Are Basic Industries Important

The basic industry is crucial for the successful functioning of the economy.

Business activities in the basic industry tend to promote high levels of imports or exports.

Consequently, with imports and exports, you have the inflow of foreign money or the outflow of domestic money.

The economies that export a lot of raw material produced by their basic industry will generate positive cash flow and thus lead to higher economic prosperity.

When outside capital is injected into the economy, this produces a positive economic impact on the nation’s economy leading to greater quality of life for all.

On the other hand, economies, where the basic industries trade internally rather than with external players, will not produce as much overall wealth for the nation as the same capital only shifts within the economy.

Characteristics of Basic Industries

The companies operating in the basic industries tend to be highly specialized firms.

The main characteristics of businesses in basic industries are that they hire highly trained individuals, the type of work performed in these companies tends to be physical in nature, and these companies leave some sort of impact on the environment.

Individuals working in basic industries are typically exposed to a high level of risk while on the job and must have the proper training to get the job done and stay safe.

Also, the employees in the basic industries tend to have highly active jobs requiring that they move about, transport things, lift things, and constantly move on the job.

Finally, basic industry businesses are companies that tend to harm the environment either by stripping the planet of its resources or creating byproducts that are harmful to the environment.

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Types of Basic Industries

To better understand the meaning of basic industries, it’s worth looking at the different types of industries in this segment.

The most common categories of basic industries are:

  • Agricultural industry
  • Oil and gas industry
  • Mining industry
  • Paper and pulp industry
  • Steel industry
  • Chemical industry

The agricultural industry is the primary source of all raw materials and the main source of food supply for the people. 

The oil and gas industry is one of the most important industries in the world focused on discovering and producing oil and gas allowing its conversion to gasoline and other products.

The mining industry is a major industry in the world where companies perform exploration and mining activities to extract different types of resources from the earth.

The steel industry is crucial, allowing other companies to produce cars, bridges, buildings, and other structures.

The chemical industry produces gases and chemical products used by other companies to create different types of products consumed by individuals or other businesses.

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Basic Industry Examples

Let’s look at some examples of basic industries to better understand the concept.

Although there are many industries that is classified as basic industry, here are some of the commonly known industries:

  • petrochemicals
  • Machine tools
  • Aluminum 
  • Cement 
  • Iron 
  • Steel
  • Oil
  • Coffee
  • Tea 
  • Sugar
  • Rubber 
  • Textile
  • Silk
  • Woolen
  • Jute
  • Cotton

Basic Industries FAQ

What are basic industries?

Basic industries are those that produce the raw materials or furnish their products to other companies who produce goods.

For example, companies producing iron, steel, aluminum, and copper are all in the basic industries as they provide the raw materials for other companies to produce cars, appliances, electronics, structures, and others.

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What is the main feature of a basic industry?

Companies in the basic industries tend to produce things that other companies will use as raw material for their own production.

For example, a steel-producing company will provide its output to other businesses that use the steel to produce their own goods.

Companies operating in basic industries tend to be very large companies employing a significant workforce.

As such, the nature of their business requires significant capital and intensive investments to maintain proper operations.

What are non-basic industries?

A business whose output is not used as raw materials by another business tends to be in a non-basic industry.

Non-basic industry includes businesses like hotels, service businesses, consulting firms, retail businesses, merchandising businesses, and many B2C businesses.

Companies in the basic industry are usually very large, need a lot of capital, have very specialized employees, and produce outputs used as raw materials by other companies.

What are some examples of companies in the basic industries?

There are many large corporations operating in the basic industries.

Here are some examples of companies operating in basic industries:

  • BHP Billiton
  • Linde
  • Unilever
  • Rio Tinto
  • Vale SA
  • Glencore International
  • Air Products and Chemicals
  • Newmont Mining
  • Ecolab
  • Freeport-McMoRan
  • Southern Copper
  • Dow Chemical
  • Barrick Gold
  • DuPont

There are many more examples that could be given but you get the idea.

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Takeaways 

So there you have it folks!

What is a basic industry?

In a nutshell, a basic industry is a type of industry that primarily focuses on the production of goods.

Typically, companies in basic industries provide the raw materials needed for many other industries to produce goods and services.

As such, basic industry businesses are fundamental for the proper functioning of the overall economy.

Now that you know what are basic industries and better understand their characteristics, good luck with your research!

Author

Editorial Staff
Hello Nation! I'm a lawyer by trade and an entrepreneur by spirit. I specialize in law, business, marketing, and technology (and love it!). I'm an expert SEO and content marketer where I deeply enjoy writing content in highly competitive fields. On this blog, I share my experiences, knowledge, and provide you with golden nuggets of useful information. Enjoy!

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