Primary Sector of the Economy and its Examples

What is the definition of the primary sector? The exploitation of raw resources is the leading sector’s focus. Fishing, farming, and mining are all part of it.

The primary sector will account for most of the economy in less developed countries. Increased labour productivity allows people to quit the agriculture sector and shift to other sectors such as manufacturing and services as an economy develops.

Primary sector examples

Some primary sector examples are – 

● Farming

● Fishing

● Mining of coal

● Forestry and logging

● Oil production

● Diamond mine

Concerns About the Primary Sector

● Natural resource use may be a source of income and export revenue for a country’s economy. Many emerging economies have benefited from the sale of oil, gas, and other natural resources, allowing them to obtain funds to spend on public services. For example, Qatar, Saudi Arabia, and Norway have effectively utilized the boost in earnings to save for the future.

● The strength of monopoly relies on the primary sector that wealth is frequently distributed unequally. For example, a small number of companies establish monopolistic control over the manufacturing of raw materials and pay their employees only a small portion of the profit. Despite having abundant raw supplies, many African emerging countries have remained impoverished, and a substantial primary sector is insufficient to drive economic development on its own.

● Primary goods are prone to price and production volatility. Oil and consumables, for example, can see substantial price changes, and inelastic price demand exists. If prices decline, governments that rely on a single industry may face a significant drop in revenue, producing issues. The EU continues to provide significant subsidies and price support to EU agriculture.

● If primary products are profitable, resources will be drawn away from other manufacturing industries and focused solely on primary industries. The difficulty is that when raw resources run out or one industry falls, the economy suffers from the ‘Dutch disease,’ characterized by a lack of broad diversification.

● We have witnessed a drop in primary sectors in developed economies. As they take a lower percentage of the economy, this can lead to structural unemployment for some time. At its peak, the coal industry in the United Kingdom employed 1.2 million people. (This was in the 1920s)