What is a Primary Economic Activity?

//What is a Primary Economic Activity?
What is a Primary Economic Activity? 2017-10-09T06:18:04+00:00

Definition: A primary economic activity is a type of operation or industry that involves extracting or refining natural resources, such as mining, agriculture, forestry, and fishing. These economic functions deliver the raw material for other industries, which further refine and develop these materials into products to sell to customers.

What Does Primary Economic Activity Mean?

What is the definition of primary economic activity? These activities include extracting natural resources from the earth to make raw materials for other companies to turn into finished products. Since these activities create the building blocks for other industries, they are included in the first or primary economic sector.

Traditionally, an economy is segregated into three sectors:

  1. Primary: processed raw material from the natural resources
  2. Secondary: engaged in manufacturing
  3. Tertiary: services based

While each sector holds its unique importance in development of an economy, often this structure serves as the guideline for the policy makers to make suited strategies for each sector. The requirements of the primary sector are different from those of the other two and need special focus for better performance.

Let’s look at an example.

Example

Company P is engaged in mining and extracts oil from oil fields. The primary component of this Company would be the technique and manpower that keep the extraction process going. This activity is a primary sector activity because it deals with extracting natural resources.

Company M, on the other hand, buys raw oil from the miners and processes it into usable fuel, petrol, diesel, edible oils, and lubricants. This would be classified in the secondary sector.

Company S, despite being into the same field, specializes in developing newer technique and approach (courtesy the research and development expertise they have) to better mine and process the proceeds from the oil fields, resulting in direct productivity improvement for the other two. Thus, company S works in the tertiary sector.

Summary Definition

Define Primary Sector Activities: PSA is a sector of the economic split-up in a country, which specializes in harnessing the natural resources to be converted into a usable form.