What’s it: The primary sector is the economic sector directly extracting natural resources. It includes agriculture, plantation, forestry, fishery, quarrying, and mining businesses. Their output becomes the raw material for the next sector, namely the secondary sector. Some also go directly to the market or are consumed like vegetables.
Apart from growing or harvesting, activities in the business sector also involve simple processing, especially post-harvest activities such as:
- Crop cleaning
- Sun drying
The post-harvest activities aim to prepare the output for marketing or further processing.
Why is the primary sector important?
The primary sector is vital for several reasons. First, it provides input for the secondary sector. For example, the primary sector mines bauxite, which is input for manufacturers to process into ingots. Aircraft manufacturers then process these ingots to make aircraft bodies.
Another example is furniture. Businesses in the forestry sub-sector are involved in logging. Furniture manufacturers then process their wood into tables, beds, chairs, and seats.
From this example, we know that the primary sector is the foundation for the secondary sector. Without raw materials from the primary sector, there would be no daily products such as cars, furniture, cans, packaged food, and beverages.
Second, the primary sector contributes output to GDP. Its contribution is significant in developing countries and low-income countries. Worldwide, agriculture, forestry, and fisheries contributed 4.3% of GDP in 2022 (measured using the value-added approach). The percentage is even more significant in low-income countries, namely 25.0%. In contrast, the percentage is low in high-income countries (1.3%).
Third, the primary sector creates significant employment. Jobs in this sector tend to be labor-intensive, requiring a large workforce. This sector creates around 50%-60% of jobs in low-income countries in 2021. Meanwhile, the percentage is less than 5% in high-income countries.
Primary sector in developed countries vs. developing country
Developing and low-income countries are highly dependent on the primary sector. We can see this from its contribution to the economy (GDP) and employment, as previously explained.
Developing countries usually rely on human labor. They apply simple technologies and techniques to manage and produce output. In addition, some activities also only aim to meet daily needs instead of for business and profit purposes.
For this reason, this sector is more labor intensive in developing than in developed countries. Because it is labor intensive, this sector absorbs a significant workforce relative to other sectors.
In contrast, developed countries invest in technology to extract output. For example, they developed agricultural mechanization and adopted more modern technologies and techniques. In addition, they invest additional capital to increase economies of scale.
Thus, in developed countries, this sector, especially in the non-mining sub-sector, is not based on fulfilling daily life but on business with a profit motive. In addition, this sector produces on a mass scale to produce output.
If you visit a developing country, you will see narrow paddy fields with several people working. In contrast, in developed countries, agricultural land is vast because it is processed using technology and heavy equipment to produce on a large scale.
Structural transformation in the primary sector
The transition from the traditional sector to the modern economy has reduced the role of the primary sector in GDP and employment. We call this change a structural transformation. When a country transitions from being based on the primary sector to based on the secondary sector, the process we call industrialization.
The transformation is characterized by increased investment in the secondary sector. Many new factories were built. Labor is also starting to shift to the secondary sector, providing less supply in the primary sector. This transition usually encourages mechanization in the primary sector to increase productivity.
By adopting more sophisticated technology and methods, mechanization enables the primary sector to produce the same output even with less labor because it increases productivity.
Activities and output of the primary sector
Primary sector economic activities take natural resources directly. They produce the smallest added value compared to the secondary and tertiary sectors. Its proportion to economic output and employment usually declines as a country moves towards industrialization.
The primary sector includes:
- Forestry and silviculture
- Animal production
Activities involved include:
- Plant growing and fruit cultivation
- Production and raising of animals
- Post-harvest harvesting activities
- Seed processing for propagation
- Animal hunting
- Logging and silviculture
- Fishing and aquaculture
- Gathering of non-wood forest products
- Coal and mineral mining
- Extraction of petroleum and natural gas
- Mining support activities
Besides taking from nature, these activities involve value-adding activities such as cooling and drying. Other activities include activities to support nature conservation.
For example, forestry is not only about cutting down trees. However, it also involves silvicultural practices to maintain or enhance forest use. Silviculture is not only aimed at producing timber and other forest products. However, it is also involved in conserving biodiversity, using forests as recreational sites, and providing environmental services.
Meanwhile, output from the primary sector is generally a raw resource. This sector produces raw materials for the secondary sector (manufacturing) for further processing. Examples are metallic minerals and petroleum. In addition, several products, such as vegetables and fruits, directly enter the market and be consumed.
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