Economic Activity: Sectors, Phases, and Company Types

Understanding Economic Activity: Concepts and Classifications

Economic activities encompass all processes used to obtain the goods and services that people need.

Phases of Economic Activity

• Production: The creation of goods and services.
• Distribution: The process of making goods and services available to consumers.
• Consumption: The use of goods and services by individuals and organizations.

Key Economic Sectors

Economic activities are broadly grouped into three main sectors:

• Primary Sector: Activities that obtain food and raw materials directly from the natural environment (e.g., agriculture, mining, fishing).
• Secondary Sector: Economic activities that transform raw materials into finished products (e.g., manufacturing, construction).
• Tertiary Sector: Activities that provide services to society (e.g., healthcare, education, retail, tourism).

Who Contributes to Economic Activity?

• Individuals: People participate in the production process and also consume goods and services.
• Companies: Businesses produce goods and services with the aim of generating profit. To achieve this, they rely on the work of individuals.

Types of Companies

Companies can be classified based on various criteria, including ownership and size.

Classification by Ownership

A company is state-owned if it is owned by the state. Other common ownership structures include sole proprietorships and limited companies.

Classification by Size

Company size can refer to either the number of workers a company employs or its capacity to generate profit.