Primary Sector – All About

The Primary Sector of Economic Sectors

In economics, the labor market is divided into three different sections, which are also called economic sectors. There is the Primary Sector, the Secondary Sector and the tertiary sector. In this article we will tell you everything about the Primary Sector. The topic is a subtopic of the Economic Sectors area and belongs to the subject Geography.

What is the Primary Sector?

The three sectors serve to classify the activities of companies. The classification of the sectors is primarily based on the timing of the production processes of goods and services.

The primary sector describes all activities that are responsible for the procurement of preliminary products and raw materials. It is also called primary production or the agricultural sector. It is at the beginning of the value chain of the national economy. A value chain represents the stages of production as an ordered sequence of activities. Transferred to the economic sectors and the primary sector, this means that this can be located at the earliest point in time in a production.

It provides the raw materials that are then processed in the Secondary Sector. In addition, the basic needs or existential needs of people are satisfied by the primary sector.

  • The agricultural sector deals with the extraction of raw materials
  • It is at the beginning of the value chain

Primary sector activities

Since raw materials have to be mined in the primary sector, the work is very physical and involves great effort. There is talk of a high labor intensity in this sector.

The area of ​​the primary sector includes, for example, work in agriculture, fishing, forestry, mining and salt production, i.e. all areas in which raw materials are extracted. Classic occupations in the sector are therefore, for example, farmer, fisherman and forester.

  • Activities in the primary sector are labour-intensive
  • Agriculture, forestry and fisheries are the classic areas of the primary sector

The development of the primary sector

Up until the middle of the 20th century, most people in Germany were employed in the primary sector. In 1950, around 21.6 percent of the population was still employed in the agricultural sector, today it is only around 2 percent. Germany has therefore developed from an agricultural society to a service society. The tertiary sector, also known as the service sector, has the most employees and also contributes the most to the gross domestic product.

The decline in the primary sector has the following causes:

  • Productivity in many areas of the primary sector has increased significantly as a result of technology and mechanization, as well as chemical and biological developments. Agriculture can be cited as an example. Through the development of fertilizers with increased performance or the invention of agricultural machines, the work of the farmers could be made considerably easier. It now takes fewer people to accomplish the same feat. This means that the food and textile needs of the population can be satisfied despite fewer workers.
  • In addition, the loss of importance of coal is one reason for the shrinking of the primary sector. In the 1990s, the energy transition to renewable energies began, which significantly reduced the need for coal. Jobs were lost and mass unemployment led to many people looking for work in the secondary or tertiary sector.
  • Another reason for the decline in importance of the agricultural sector in Germany, as well as in many other industrialized countries, is the international division of labour. As part of the international division of labour, the fundamental work of the agricultural sector is often relocated to developing countries, whose natural products are bought up by richer nations.

International division of labor means that countries specialize in different areas of economic activity. Specialization means that a service can be provided more cost-effectively and better. However, primary sector outsourcing does not always have an economic benefit for developing countries, as the size of a country’s agricultural sector is related to its level of development.

Primary Sector – Indicator of a country’s level of development

The indication of the proportion of employees in the primary sector can be used to classify the progressiveness of an entire economy. The smaller a country’s primary sector, the more advanced that country is, and vice versa. There is thus an inverse relationship between the primary sector and a country’s level of development

That means:

  • In developing countries, the proportion of people working in the primary sector is high.
  • Emerging countries are one step up in development and have most employees in the secondary sector.
  • In industrialized countries, on the other hand, the primary sector is rather small and has few employees. The largest sector here is the tertiary sector.

This can be explained as follows:

In order to be able to work in the primary sector, no training is often required. For this reason, wages are also lower than when working in the secondary or tertiary sector. In addition, with most basic and raw materials, only a comparatively low return on sales or added value can be achieved. The change to a service and knowledge society (tertiary sector) or to a higher proportion of manufacturing companies (secondary sector) can therefore be equated with an increase in prosperity.

Because the more people earn less, the more the purchasing power of the population and thus the gross domestic product decreases. So the economy cannot make great progress if the majority of the population works in the primary sector.

The primary sector – autonomy of an economy

Countries without a functioning primary sector are completely dependent on external relations for both food supplies and valuable raw materials. The existence of raw materials and the existence of a primary sector in a country is therefore of essential importance for a country’s influence on the world. More and more governments, including Germany, are now paying more attention to the agricultural sector in order to create an autonomous economy.

The Primary Sector – Everything important at a glance!

  • The primary sector, also called primary production or agricultural sector, describes all activities that are responsible for the procurement of preliminary products and raw materials.
  • In highly developed countries, comparatively few people work in the agricultural sector, while in developing countries there are many.
  • In Germany one could observe a development from an agrarian society to a service society.
  • The size of the primary sector is also an indicator of a country’s level of development.
  • The primary sector is of great importance for the autonomy of an economy.