SCOPE OF ECONOMIC ACTIVITY: - PRODUCTION AND DISTRIBUTION
OBJECTIVES:
The student will be able to:
mention some economic activities in their locality
describe how goods reach final consumers
classify various economic activities into:
(i) primary production
(ii) secondary production
(iii) tertiary production
identify the contributions of various economic activities to the economy
ECONOMIC ACTIVITY
Economic activity is the production, distribution and consumption of commodities.
Economic activity could also be defined as any activity for which one receives an income.
Some economic activities include: farming, teaching, hunting, banking, quarrying, driving,
sand winning, making wooden, manufacturing planks, fishing, trading, computer repairs, road
construction, mobile phones manufacturing. Economic activities consist of production and
distribution and consumption; production is not complete without the produce reaching the
consumer (distribution).
PRODUCTION
Production is the organized activity of transforming resources into finished products in the
form of goods and services to satisfy human wants and needs. Production also refers to the
creation of wealth. Land, labour, capital and organization are the four factors of production.
DISTRIBUTION
Distribution is the way total output, income, or wealth is distributed among individuals or
among the factors of production such as labour, land and capital. Distribution is the process of
bringing goods and services from producers to consumers through middlemen or
intermediaries such as wholesalers and retailers. production is not complete without the
produce reaching the consumer (distribution).
CONSUMPTION
consumption is defined as the satisfaction of human wants through the use of goods and
services. Consumption means the direct and final use of goods and services in satisfaction of
human wants. People consume such single use goods as foodstuffs, fuel, matches, cigarettes,
etc. and durable use goods such as tables, scooters, watches, clothes etc.
CLASSIFICATION OF ECONOMIC ACTIVITIES
Economic activities are usually classified into 3 groups for purposes of decision-making:
PRIMARY SECTOR
Primary sector refers to that sector of the economy which is concerned with the production of
raw materials from the soil, water bodies etc.
,Primary sector could also be referred to that sector of the economy which uses natural
resources to produce goods. The primary sector includes fishing, farming, hunting, forestry,
mining, livestock rearing, quarrying, lumbering and among others.
SECONDARY SECTOR
Secondary sector refers to that sector of the economy which is concerned with the
transformation of raw materials into finished or semi-finished goods. Secondary sector
includes those activities, which result in transformation of natural products into other forms
by manufacturing. Secondary sector includes manufacturing industries and construction
industries.
TERTIARY SECTOR
Tertiary sector refers to that sector of the economy which is concerned with the production of
services. Tertiary sector includes those activities that help in the development of the primary
and secondary sectors by supporting the production process. In the tertiary/services sector, all
types of services are included. These are trade, repair, hotels and restaurants, transport, storage,
communication and services related to broadcasting, financial, real estate etc.
By 2017, service sector contributed to 59.5% of GDP and employed 40% of the working
population. These figures reflect an increase in the importance of the tertiary sector in the
economy. The table below has shown the contribution of the various sectors to total output of
the country from 2006 to 2017.
TABLE SHOWING CONTRIBUTION OF THE SECTORS TO GDP 2006-20176(%)
Year Agriculture industry Services GDP at basic
prices
2006 30.4 20.8 48.8 100
2007 29.1 20.7 50.2 100
2008 31.0 20.4 48.6 100
2009 31.8 19.0 49.2 100
2010 29.9 18.8 51.3 100
2011 27.2 20.2 52.6 100
2012 24.8 22.0 53.3 100
2013 24.4 21.3 54.3 100
2014 23.2 20.9 56.0 100
2015 21.2 21.9 56.6 100
2016 19.3 22.7 58.1 100
2017 19.4 21.1 59.5 100
Source: Ghana Statistical Service (GSS)
The Provisional 2017 Annual Gross Domestic Product provided by Ghana Statistical Services
shows that the contribution of the services sector to nation’s GDP has been relatively higher
than the other sectors.
PRIMARY PRODUCTION
,Primary production refers to the extraction of basic raw materials from their natural location
as provided by nature. Examples of primary production are mining, quarrying, farming, fishing
and forestry, all of which produce raw materials that can be processed in to a finished product.
IMPORTANCE OF PRIMARY PRODUCTION
Contributions of primary production to the economy of Ghana
a. Employment
The primary industries together employ over 65% of the working population in Ghana. These
various industries serve as employment and help people to earn income to improve their lives.
Majority of the people at the rural areas are farmers and fishermen.
b. Foreign exchange
Most of the primary industries in Ghana such as timber industry, cocoa industry, mining
industry etc. do not process or add value to their raw materials. Their raw materials are
exported to other countries and this earns the country foreign exchange.
c. Raw materials
Some of the industries process or add value to the raw materials form the primary industries.
For example, cocoa beans obtained from the cocoa industries are processed by some
companies such as Cocoa Processing Company into chocolates etc.
d. Food supply
Primary production provides the country with food. These foods are obtained from farms,
animal and fishes. Majority of Ghanaians feed on farm products such as maize, cocoyam,
cassava, plantain etc.
e. Revenue
The primary industries in Ghana include; timber industry, cocoa industry, fishing industry,
mining industry etc. all these industries pay monies to the government in the form of taxes or
levies. These monies are called revenues and they are used for developmental projects in the
country.
SECONDARY PRODUCTION
Secondary production involves the transformation or conversion of raw materials into finished
or semi-finished goods that are acceptance to the consumers. This is mostly done through
manufacturing, processing, construction among others. For instance, when the cocoa is
processed into chocolates, it means secondary production has taken place.
IMPORTANCE OF SECONDARY PRODUCTION
a. Employment
Through secondary production, a lot of unemployed resources such as land, labour and capital
are put into effective use. Secondary industries such as manufacturing, construction and
processing offer employment to a lot of people in Ghana and thereby reducing unemployment
rate.
, b. Revenue
Government generates revenue from secondary industries in Ghana such as cocoa processing
industries, manufacturing industries and constructions industries by imposing taxes on their
profits and the secondary product being exported. The generated revenue is used to carry out
developmental project in the country.
c. Foreign exchange earning
The country earns more foreign exchange by exporting secondary products. This foreign
exchange can be used to buy inputs and equipment needed for economic development. Part of
it can also be used to defray part of our national debt.
d. Savings
Profit margins in the industrial sector are higher than those in agriculture, and this may lead to
higher levels of saving.
e. Market for primary product
Secondary sectors purchase foodstuffs and raw materials produced by primary sector and
process it into finished and semi-finished products. This therefore encourage those engage in
primary economic activities to expand their production capacity which lead to increase in
national output.
f. Income
Secondary industries employ people who earn income. This income enables them to afford
basic necessities of life like food, clothing, shelter and so on.
TERTIARY PRODUCTION
The tertiary industry is the segment of the economy that provides services to its consumers,
including a wide range of businesses such as financial institutions, schools and restaurants. It
is also known as the tertiary sector or service industry/sector. This mostly involves transport,
teaching, banking, shipping, insurance, wholesaling, retailing, advertising, nursing among
others.
IMPORTANCE OF TERTIARY PRODUCTION
What do you think about the role of the service sector?
Discuss the significance of the service sector to the Ghana economy.
a. Employment
In Ghana, the service sector is the second largest sector, next to agriculture, in terms of
absorbing a significant part of the labor force. About 30% of the total labor force is employed
in tertiary sector such as health, education, communication, transport sectors etc.
b. Foreign exchange
OBJECTIVES:
The student will be able to:
mention some economic activities in their locality
describe how goods reach final consumers
classify various economic activities into:
(i) primary production
(ii) secondary production
(iii) tertiary production
identify the contributions of various economic activities to the economy
ECONOMIC ACTIVITY
Economic activity is the production, distribution and consumption of commodities.
Economic activity could also be defined as any activity for which one receives an income.
Some economic activities include: farming, teaching, hunting, banking, quarrying, driving,
sand winning, making wooden, manufacturing planks, fishing, trading, computer repairs, road
construction, mobile phones manufacturing. Economic activities consist of production and
distribution and consumption; production is not complete without the produce reaching the
consumer (distribution).
PRODUCTION
Production is the organized activity of transforming resources into finished products in the
form of goods and services to satisfy human wants and needs. Production also refers to the
creation of wealth. Land, labour, capital and organization are the four factors of production.
DISTRIBUTION
Distribution is the way total output, income, or wealth is distributed among individuals or
among the factors of production such as labour, land and capital. Distribution is the process of
bringing goods and services from producers to consumers through middlemen or
intermediaries such as wholesalers and retailers. production is not complete without the
produce reaching the consumer (distribution).
CONSUMPTION
consumption is defined as the satisfaction of human wants through the use of goods and
services. Consumption means the direct and final use of goods and services in satisfaction of
human wants. People consume such single use goods as foodstuffs, fuel, matches, cigarettes,
etc. and durable use goods such as tables, scooters, watches, clothes etc.
CLASSIFICATION OF ECONOMIC ACTIVITIES
Economic activities are usually classified into 3 groups for purposes of decision-making:
PRIMARY SECTOR
Primary sector refers to that sector of the economy which is concerned with the production of
raw materials from the soil, water bodies etc.
,Primary sector could also be referred to that sector of the economy which uses natural
resources to produce goods. The primary sector includes fishing, farming, hunting, forestry,
mining, livestock rearing, quarrying, lumbering and among others.
SECONDARY SECTOR
Secondary sector refers to that sector of the economy which is concerned with the
transformation of raw materials into finished or semi-finished goods. Secondary sector
includes those activities, which result in transformation of natural products into other forms
by manufacturing. Secondary sector includes manufacturing industries and construction
industries.
TERTIARY SECTOR
Tertiary sector refers to that sector of the economy which is concerned with the production of
services. Tertiary sector includes those activities that help in the development of the primary
and secondary sectors by supporting the production process. In the tertiary/services sector, all
types of services are included. These are trade, repair, hotels and restaurants, transport, storage,
communication and services related to broadcasting, financial, real estate etc.
By 2017, service sector contributed to 59.5% of GDP and employed 40% of the working
population. These figures reflect an increase in the importance of the tertiary sector in the
economy. The table below has shown the contribution of the various sectors to total output of
the country from 2006 to 2017.
TABLE SHOWING CONTRIBUTION OF THE SECTORS TO GDP 2006-20176(%)
Year Agriculture industry Services GDP at basic
prices
2006 30.4 20.8 48.8 100
2007 29.1 20.7 50.2 100
2008 31.0 20.4 48.6 100
2009 31.8 19.0 49.2 100
2010 29.9 18.8 51.3 100
2011 27.2 20.2 52.6 100
2012 24.8 22.0 53.3 100
2013 24.4 21.3 54.3 100
2014 23.2 20.9 56.0 100
2015 21.2 21.9 56.6 100
2016 19.3 22.7 58.1 100
2017 19.4 21.1 59.5 100
Source: Ghana Statistical Service (GSS)
The Provisional 2017 Annual Gross Domestic Product provided by Ghana Statistical Services
shows that the contribution of the services sector to nation’s GDP has been relatively higher
than the other sectors.
PRIMARY PRODUCTION
,Primary production refers to the extraction of basic raw materials from their natural location
as provided by nature. Examples of primary production are mining, quarrying, farming, fishing
and forestry, all of which produce raw materials that can be processed in to a finished product.
IMPORTANCE OF PRIMARY PRODUCTION
Contributions of primary production to the economy of Ghana
a. Employment
The primary industries together employ over 65% of the working population in Ghana. These
various industries serve as employment and help people to earn income to improve their lives.
Majority of the people at the rural areas are farmers and fishermen.
b. Foreign exchange
Most of the primary industries in Ghana such as timber industry, cocoa industry, mining
industry etc. do not process or add value to their raw materials. Their raw materials are
exported to other countries and this earns the country foreign exchange.
c. Raw materials
Some of the industries process or add value to the raw materials form the primary industries.
For example, cocoa beans obtained from the cocoa industries are processed by some
companies such as Cocoa Processing Company into chocolates etc.
d. Food supply
Primary production provides the country with food. These foods are obtained from farms,
animal and fishes. Majority of Ghanaians feed on farm products such as maize, cocoyam,
cassava, plantain etc.
e. Revenue
The primary industries in Ghana include; timber industry, cocoa industry, fishing industry,
mining industry etc. all these industries pay monies to the government in the form of taxes or
levies. These monies are called revenues and they are used for developmental projects in the
country.
SECONDARY PRODUCTION
Secondary production involves the transformation or conversion of raw materials into finished
or semi-finished goods that are acceptance to the consumers. This is mostly done through
manufacturing, processing, construction among others. For instance, when the cocoa is
processed into chocolates, it means secondary production has taken place.
IMPORTANCE OF SECONDARY PRODUCTION
a. Employment
Through secondary production, a lot of unemployed resources such as land, labour and capital
are put into effective use. Secondary industries such as manufacturing, construction and
processing offer employment to a lot of people in Ghana and thereby reducing unemployment
rate.
, b. Revenue
Government generates revenue from secondary industries in Ghana such as cocoa processing
industries, manufacturing industries and constructions industries by imposing taxes on their
profits and the secondary product being exported. The generated revenue is used to carry out
developmental project in the country.
c. Foreign exchange earning
The country earns more foreign exchange by exporting secondary products. This foreign
exchange can be used to buy inputs and equipment needed for economic development. Part of
it can also be used to defray part of our national debt.
d. Savings
Profit margins in the industrial sector are higher than those in agriculture, and this may lead to
higher levels of saving.
e. Market for primary product
Secondary sectors purchase foodstuffs and raw materials produced by primary sector and
process it into finished and semi-finished products. This therefore encourage those engage in
primary economic activities to expand their production capacity which lead to increase in
national output.
f. Income
Secondary industries employ people who earn income. This income enables them to afford
basic necessities of life like food, clothing, shelter and so on.
TERTIARY PRODUCTION
The tertiary industry is the segment of the economy that provides services to its consumers,
including a wide range of businesses such as financial institutions, schools and restaurants. It
is also known as the tertiary sector or service industry/sector. This mostly involves transport,
teaching, banking, shipping, insurance, wholesaling, retailing, advertising, nursing among
others.
IMPORTANCE OF TERTIARY PRODUCTION
What do you think about the role of the service sector?
Discuss the significance of the service sector to the Ghana economy.
a. Employment
In Ghana, the service sector is the second largest sector, next to agriculture, in terms of
absorbing a significant part of the labor force. About 30% of the total labor force is employed
in tertiary sector such as health, education, communication, transport sectors etc.
b. Foreign exchange
