Economic Systems and Sectors: A Detailed Analysis
Economic Goods
Economic goods are products and services generated by economic activity.
Composition: They can be consumable (durable consumer goods, such as computers, or non-durable, such as pizza) or capital goods (tools, equipment). Function: They can be intermediate goods (wool produced by a sheep) or finished goods (the shirt made from this wool). Ownership: They can be private (belonging to people, families, or businesses) or public (belonging to the state).
Factors of Production
- Natural resources: These are the resources that are provided by nature and which can be used by mankind.
- Human resources: These are the people who, by virtue of their labor, exploit and convert natural resources into economic goods.
- Capital: This is made up of the material, technical, and financial resources (machinery, money) that are needed to obtain products and provide services.
Current Economic Systems
- Capitalist or market economy: This is based on a free market economy (the law of supply and demand between producers and consumers), private ownership (individual or companies) of the means of production, freedom to work and hire, and state intervention on a small scale.
One variation of this, which is becoming more widespread, is the mixed economy. This involves greater intervention from the state in terms of establishing laws, regulating certain prices, and providing for the social well-being of its citizens. Both of these systems are used widely across the world. - Communist or planned economy: In this system, the economy is planned and centralized by the state, the production process is controlled, and the state is the owner of the means of production. Private property and initiative do not exist, only state-owned properties. Its objective is to achieve collective benefit through policies decided upon by the state. This system was very important in the past, but it has practically disappeared since the break-up of the Soviet Union in 1991.
- Subsistence economy: This is a system based on production for self-consumption in the poorest and most isolated areas in the world. There is no division of labor or mechanization, and there is hardly any economic or social development.
The Primary Sector
Although the primary sector has gone through big changes over the last few years, it is still significant because it provides food as well as the raw materials that industry uses and converts into other things.
The Primary Sector in Spain
Agricultural activities (farming and livestock), forestry, mining, and fishing are carried out by fewer and fewer people (just over 4% of the working population) due to mechanization.
The Secondary Sector
The secondary sector is mainly a sector that involves production and construction. It requires a large amount of energy, which is extracted from a variety of natural resources.
The Secondary Sector in Spain
The Spanish secondary sector consists of activities related to industry and energy, which are necessary for industrial machines to run properly, as well as construction, which employs about 19% of the workforce.
The Tertiary Sector in Spain
In Spain, tertiary activities employ 76% of the workforce, divided between the public sector and the private sector.
- Government, the administration of justice, and public safety
- Education and healthcare
- Banking
- Tourism