Understanding Economic Activity, Sectors, and Global Systems

Economic Activity Defined

Economic activity is the combination of tasks undertaken by people to obtain the goods required to meet their needs.

Types of Goods

• Material: Food, clothing, housing.
• Immaterial (Services): Education, health care.

Components of Economic Activity

• Production of goods.
• Distribution of goods to consumers.
• Consumption of goods by consumers.

Economic Sectors

• Primary: Agriculture, livestock farming, forestry, and fishing.
• Secondary: Industry and construction.
• Tertiary: Transport, tourism, trade, education, and health care.

Economic Agents

Businesses

The basic unit for the production of economic goods. Its function is to produce, distribute, and sell goods to consumers with the aim of obtaining economic profit.

Business Classification

• Size: Small (<50 employees), Medium (50-250), Large (>250).
• Capital Ownership: Public or private companies.
• Social Organisation: Public limited companies, limited companies, and cooperatives.

Note: Pymes refers to small and medium-sized enterprises.

Families

The basic unit of consumption. Their function is to buy goods to satisfy their needs.

The State

A unit of production and consumption. Its function is to provide necessary public services and purchase goods from private companies to ensure social welfare.

The Economic Circuit

The relationship between the different agents (businesses, state, families), the job market, and the goods and services market.

Geoeconomic Areas

• The Triad: Developed countries with a strong tertiary sector (e.g., North America, EU, Japan).
• Emerging Countries: High GDP, lower GDP per capita, strong secondary sector.
  • BRICS: Brazil, Russia, India, China, South Africa.
  • MINT: Mexico, Indonesia, Nigeria, Turkey.
• Developing Countries: Primary sector and agrarian activities (e.g., Sub-Saharan Africa, parts of Latin America, Southeast Asia).

Business and Economic Systems

Limited Liability Company

A business in which the capital is provided by a number of partners. The responsibility is limited to the capital these partners invest.

Capitalist System

Economic activity is regulated by the market, often called a market economy. It is based on the law of supply and demand, private property, and the search for maximum individual profit.

Neoliberalism

A capitalist ideology that defends the total liberalization of the economic system. It advocates for minimal public expenditure and the privatization of state enterprises.