Classifying Economic Activities and Sectors

Posted on Mar 28, 2025 in Geography

Economic Activity Classification

Primary Economic Activities

This category includes activities involving the direct extraction and harvesting of natural resources from the earth. Examples include farming (vegetable and animal husbandry), forestry, and the exploitation of mines and hydrocarbons.

Sectors within Primary Activities:

  • Agriculture: The art and science of cultivating the land to achieve maximum yield of products necessary for the preservation and development of human life.
  • Forestry: The art of cultivating and managing forests to obtain high-performing materials for industrial use.
  • Livestock: The art of raising cattle and other animals, aiming for the best results with minimal economic inconvenience. This is often based on criteria such as breed quality and market demand.
    • Poultry Breeding: Its economic importance has increased significantly, moving from a domestic activity to a booming industry. For example, in 1993, it represented 34.2% of the livestock production value.
  • Fishing: An activity whose economic importance has grown as extraction methods and fish conservation techniques have been refined.

Secondary Economic Activities

This category includes activities that process raw materials into finished goods. It encompasses the industrial sector, including manufacturing, construction, and utilities (electricity, gas, water).

Sectors within Secondary Activities:

  • Industry: Transforms raw materials or intermediate goods into finished products.
  • Construction: Refers primarily to the building of residential and non-residential structures. Key legal instruments governing industrial construction may include: Housing Policy Act, Organic Law of Urban Management, Protection Act for the Mortgagor, The Ministry of Urban Development. According to 1993 data, construction activities (including the oil industry’s related construction) contributed approximately 45% of the total Gross National Product (GNP/PTB) and employed 27% of the national economically active population.
  • Industrial Manufacturing: This can be grouped into:
    • Traditional: Accounted for 53.3% of establishments, 29.1% of production value, and 41.8% of staff (based on referenced data).
    • Intermediate: Accounted for 18.7% of establishments, 34.6% of production value, and 64.6% of staff.
    • Mechanical: Accounted for 19.2% of establishments, 11.3% of production value, and 17.6% of staff.
    • Residual/Waste Processing: Accounted for 9.8% of establishments, 2.3% of production value, and 6% of staff.

    Overall, manufacturing industries (including the oil industry) contributed 45.1% to GDP and employed 27.5% of the national workforce (based on referenced data).

  • Electricity Generation: Production is achieved through thermoelectric and hydroelectric systems. Operationally, it uses interconnected and isolated systems. In 1993, this industry contributed 2.14% to the GNP/PTB and employed 1% of the national workforce.

Tertiary Economic Activities

This category includes activities that provide services rather than producing tangible goods. It covers trade, transport, finance, communication, and other services. While generally not ‘productive’ in the sense of creating physical goods, they are essential for completing the economic cycle: production-distribution-consumption.

Characteristics of Economic Sectors

  • Tertiary activities comprise a set of commercial and service functions designed to meet the vital needs of the population.
  • These activities are often concentrated in large cities, which serve as principal markets and service hubs for smaller surrounding areas.
  • The relative importance (placement) of these sectors determines a country’s economic structure. For instance, in 1993, the referenced economy had the tertiary sector ranked first, secondary second, and primary third.

Economic Structure Formulas

The structure of an economy can be represented by the order of importance of the sectors (I = Primary, II = Secondary, III = Tertiary).

  • Developed Countries Formula: Often characterized by technology-intensive industry, mechanized and specialized agriculture/livestock, robust trade and banking, efficient transport and services, and rational bureaucracy. Common structures might be II, I, III; II, III, I; or III, II, I.
  • Underdeveloped Countries Formula: Typically feature a backward/traditional primary sector, a large bureaucratic tertiary sector (often with underemployment and speculative trade/finance), and a secondary sector of limited or traditional character. Common structures might be I, III, II or III, I, II.
  • Example (Venezuela): The 1971 census indicated a structure of III, II, I. This might superficially resemble a developed country’s structure, but requires deeper analysis of the nature of each sector’s contribution.