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What is the Primary Sector?
What’s important to know about it?
In this article, I will break down the meaning of the Primary Sector so you know all there is to know about it!
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What Is The Primary Sector
In economics, the primary sector refers to the industries primarily focusing on the extraction and production of raw materials.
The primary sector includes industries like agriculture, farming, logging, fishing, forestry, hunting, and mining.
It’s called the primary sector as the companies operating in this sector produce or extract the raw materials needed by many other industries to produce goods and services.
For example, companies that produce corn, grains, or extract fossil fuels are in the primary sector as they provide or extract the raw materials needed by other industries to produce their goods.
Typically, the revenues generated by the primary sector tend to be higher in developing countries than in more developed countries.
Furthermore, in developing countries, there are more people that work in the primary sector than in developed countries as they tend to use low-tech equipment and handle processes manually.
It is essential that the primary sector operates efficiently so all other industries in the secondary and tertiary industries can properly function.
Keep reading as I will further break down the meaning of the primary sector and see why it’s important.
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Why Is The Primary Sector Important
The primary sector is probably the most important sector in any economy as it provides the raw materials needed to produce all the goods we consume.
In essence, the primary sector is foundational for the creation and production of all products that are produced in the economy.
For example, we rely on dairy products for many products sold in the food industry.
We rely on the fishing industry to provide us with fish that we consume, oils, and other products.
We rely on agriculture to produce and extract corn and other grains that we use to produce other goods.
Without the primary sector, we will not have the foundational raw materials needed to provide essential and non-essential goods to consumers.
In developing countries, governments invest in the primary sector to increase output and use various technological advancements to reduce overall production costs.
Typically, the primary sector sells its raw materials to companies in the secondary and tertiary sectors, although they can sell to consumers directly as well.
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Primary Sector vs Other Economic Sectors
In economics, sectors are used to classify different companies based on their main business activities.
Companies are therefore classified into three main sectors, the primary sector, secondary sector, and tertiary sector.
The primary sector is defined as companies that participate in the harvesting and extraction of natural resources from the earth.
Such activities include mining, quarrying, fishing, agriculture, forestry, and hunting.
The secondary sector refers to the companies that use the raw materials provided by the primary industry and who process them to produce goods.
Examples of industries in the secondary sector are automobile, textile, chemical, energy, and so on.
Then you have the tertiary sector referring to companies that provide services to the economy.
Examples of industries in the tertiary sector are financial services, retail, transportation, restaurants, tourism, legal services, healthcare, and so on.
Some also consider that there are two other sectors, the quaternary sector, and the quinary sector.
The quaternary sector is referred to as the sector consisting of intellectual property activities linked to technological innovations.
The quinary sector refers to the highest level of decision-making in society such as top executives, government officials, and others.
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Primary Sector Examples
The primary sector refers to the segment of the economy where companies are engaged in activities to extract natural resources and provide the raw materials needed by other industries.
Here are some examples of companies in the primary sector:
- Raising livestock
- Growing crops
- Tree harvesting
- Tree farms
- Wood production
- Fossil fuel extraction
- Natural gas
- Crude oil
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Primary Sector FAQ
What is the definition of the primary sector?
The primary sector is defined to be all the activities performed by companies that produce or extract raw materials needed by other industries, such as agriculture, fishing, forestry, mining, and so on.
How is the primary sector impacted in a growing economy?
When the economy is growing and generating greater output, companies in the primary sector tend to see an increase in their revenues.
This is the case as more raw materials will be needed to supply the goods needed in the growing economy.
Since there is a greater production of essential and non-essential goods, the primary sector will see important increases in their revenues.
How is the primary sector impacted in a slowing economy?
When the economy slows down, consumers will typically cut back on their spending and purchase less non-essential or luxury goods.
As a result, companies that produce the raw materials in the food industry and essential goods will see strong revenues compared to other sectors of the economy.
This is the case as consumers will always need to eat and purchase essential goods for their day-to-day lives.
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So there you have it folks!
What does the primary sector mean in economics?
In a nutshell, the primary sector refers to the industries that produce, extract, or harvest the raw materials needed by other industries to produce goods in the economy.
As such, the primary sector is foundational to all other sectors.
The main activities in the primary sector are agriculture and allied activities, fishery, forestry, mining, hunting, logging, farming, and others.
Not only the primary sector is key for other industries but it also contributes to the national income, helps employ a large number of people, and supplies the economy with food, and raw materials for other industries.
Now that you know what the primary sector is all about and how it works, good luck with your research!
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