4 Types of Economic Activities

Human activities are basically classified into two categories, economic activity and non-economic activity. The economic activities of the citizens are responsible for creating the economic status of the nation on the globe. 

 

The economic status here refers to the GDP and the GNP index. As the name suggests, economic activity is related to monetary and profit related terms, where the non-economic activities have no contribution in the financial matters of the country. 

 

In this blog, we will study the proper definition and relevant examples of economic activity. We will also consider the types of economic activities that exist in nature. 

 

Also Read | AI in manufacturing

 

What is an Economic Activity?

 

According to the Insee definition, an economic activity is a process that, based on inputs, leads to the manufacture of a good or the provision of a service. The classification of activities divides economic activities into categories which, by aggregation, make it possible to define the sectors of activity (Agriculture, Industry, Construction, Trade, etc.).

 

Economic activity in simple words is defined as the activity of making, purchasing, selling or providing goods. It involves all acts of exchange of products or services. 

 

From the product of a product or service, to its distribution among the commons, every step is an economic activity. The main aim of economic activity is to serve the needs of the public and to bridge the gap between products and customers.

 

Also Read | Types of Economic Theory
 

 

Examples of Economic Activities

 

Economic activities are present at every level within the society. Let us consider some examples of economic activities from day-to-day life.

 

1. A housewife running a small bakery business is performing an economic activity.

 

2. Simply getting yourself a chocolate or buying vegetables from a street seller is also an economic activity.

 

3. Employees whether laborer or managers working in industries and earning wages are involved in a type of economic activity

 

4. You getting your car refuel is an example of economic activity.

 

5. Even when your mom exchanges a bowl of sugar with some sugar from your neighbor is also a kind of economic activity.

 

6. Creating job opportunities or participating in one of them.

 

7. A big firm manufacturing clothes or any other product to sell it across the market.

 

Also Read | Economic Indicators

 

Characteristics of an Economic Activity

 

You might be wondering how you can distinguish an economic activity from a non-economic activity. The characteristics that make an economic activity different from non-economic activity are as follows:

 

1. All economic activity always generates some source of income.

 

2. If not monetary income, the person involved always gets something to fulfill his needs at the end of conduct.

 

3. The economic activities are productive in nature. The intermediate process always has something that involves something with aspects to the production process.

 

4. Consumption is also an economic activity, as it generates demand in the market. The demand thus generated further affects the production and supply chain of the product.

 

5. At the end economic activities help in creating some savings and investments.

 

 

Types of Economic Activities

---

Types of Economic Activities

---

 An economic activity is classified on the basis of customers it connects and serves and by the kind of services it delivers. Depending on the mentioned criteria, economic activities are divided into following major four types, Primary, Secondary, Tertiary and Quaternary. 

 

Let us consider the basic differences that make all these four terms different from each other. We will also see examples of each of them. 

 

1. Primary Economic Activity

 

As the name suggests, Primary means the first. The primary economic sector is basically the raw material provider for the other sectors. The primary activity uses the assistance of earth and prepares its final goods. 

 

The final product of primary economic activities serves as the raw material for other sectors secondary and tertiary. It basically involves activities related to nature resources or obtaining resources from nature directly. For consideration hunting, farming, gathering, fishing, forestry, animal husbandry and mining are the primary activities. 

 

People engaged in primary sectors are called red-collar workers and almost all are involved in outdoor activities. Primary activity is related to trading of goods in different chains, thus it plays a vital role in nations economy.

 

2. Secondary Economic Activity

 

Secondary economic activity depends on primary economic activity for is raw material. The final products of primary activity are used as raw material to do secondary economic activity. Secondary economic activities add value to already existing process. This can be achieved simply by processing the existing product. 

 

For example, agricultural products are used by the sugar industry and others. While the mining products are used by steel plants. Secondary economic sector basically consists of commercial industries and manufacturing industries. 

 

The process of the secondary sector is a bit complex, everything from processed food items to clothes belongs to this sector. The workers involved in the secondary activities are called blue-collar workers.

 

Also Read | Deflation and inflation

 

3. Tertiary Economic Activity

 

Tertiary activities are activities concerned with providing service, exchange and production to some extent. Exchange here involves trade, transport and communication facilities while the services can be any service barber, doctor, teacher, musician, clerk, artist, watchman etc. 

 

The tertiary economic sector can be termed as personal and business services. The major sector of this sector doesn’t produce physical products but deliver services which we can’t fulfill ourselves. The workers engaged in tertiary activities have specialized knowledge about their work and are subject experts. They are called pink-collar workers.

 

4. Quaternary Economic Activity

 

Quaternary services include the services that are provided in a special environment. For consideration, health services are provided in hospitals, hospitality and management in hotels, education in schools and universities and software related to devices and the internet. In simple words, quaternary services are allocated to specific workplaces and are the developed form of tertiary services. 

 

Employees here are trained with specific knowledge, technical skills like communication and administration. For example, researchers, legal consultants, software personnel etc. Workers employed in quaternary services are called white-collar workers.

 

Also Read | Human Development Index

 

Before concluding this blog, let us consider a common example to hit the topic clearly. Person A works in a coal mine, where he extracts the coal and other earthy resources. 

 

Person B works as a laborer in an electricity plant where electricity is generated using coal. Person C has a slurry business, and he transports coal from mines to the plants. Person D is a software developer who designs machines and software for the electricity plant.

 

In the above example, person A is involved in primary economic activity, person B in secondary economic activity, person C in tertiary economic activity and person D in quaternary economic activity.

 

But one point must be noted here, all the sectors of the economy are important. We can’t even imagine life without one of these activities. Each and every individual directly or indirectly serves the nation's growth.