Credit usually promotes economic activity.
Economic activity is the procedure that involves the production and exchange of services and products to satisfy the needs of individuals. Each economic activity develops in three phases: the generation of the service or product, its distribution and finally consumption. The entire process produces wealth.
It should be noted that activities are those actions or processes carried out by individuals or organizations. The adjective economic , for its part, refers to what is linked to the economy (the science dedicated to the analysis of the satisfaction of people's material needs from resources that are scarce).
Types of economic activity
It is possible to divide economic activities into three large groups: primary economic activities , secondary economic activities and tertiary economic activities . Primary activities consist of obtaining raw materials from nature : for example, planting and harvesting potatoes.
Among the main activities that are included within this primary sector we can highlight, therefore, agriculture, mining, hunting, fishing, livestock and forestry, among others.
Secondary economic activities , on the other hand, involve the transformation of raw materials (freezing and vacuum packaging potatoes for sale in supermarkets, to name one possibility).
This second group of economic activities is where construction, steel, manufacturing, energy generation, food production, the pharmaceutical industry, the chemical industry are found...
Tertiary economic activities , finally, are services : those processes that do not include the production of a physical good. The transportation of packaged potatoes to the supermarket is an example of a tertiary economic activity.
In this third group of economic activities is where we come across tourism, transportation, education, communications and commerce.
In socialism, the government carries out strict regulation of economic activity.
Some features
It should be noted that economic activity can be carried out by a person (an independent worker), an organization (be it a company, a cooperative, etc.) or the State (a public company).
It is also important to highlight the fundamental weight that economic activity exerts in any country or region since its wealth will depend on it. However, each place stands out for giving priority to one activity or another, based on its raw materials or potential. Thus, for example, in Spain there are autonomous communities that primarily develop olive production or vineyards, while others rely on mining or industry in general.
A free trade zone can promote economic activity.
Importance of economic activity
It can be said in a sense that economic activity is the basis of wealth . Whether it is a productive venture, the offer of a service or an operation on the stock market, the notion covers processes that involve the circulation of money or currencies .
When economic activity grows in a country, the income of the population usually increases . In the labor market, the demand for workers increases (that is, the supply of jobs increases), thereby decreasing unemployment. If the nation has international competitiveness, it will also be able to increase its exports through international business.
It should be considered, however, that economic growth does not always benefit the entire population. Income distribution, for example, is often unequal . On the other hand, if there is high inflation (increased prices), the population's standard of living may worsen even if there is no economic recession.
Another issue to consider is that economic activity can threaten natural resources . This ranges from possible damage to health to the impossibility of promoting economic growth in the future due to resources being degraded or depleted.
It should be considered that those who administer the State can influence economic activity through monetary policy , public banking and other tools. State investment in infrastructure and aid for innovation and technology development can also contribute to the growth of economic activity.
Related concepts
In addition to all of the above, when referring to economic activity it is essential to take into account a series of concepts that are key to understanding it. We are referring to issues such as inflation, the cost of living, profit, service and good, among many others.
This without forgetting others such as, for example, production, investment, GDP (Gross Domestic Product),
GNP (Gross National Product), speculation, productivity, savings, fiscal policy, competitiveness, finance and the market.
This list of concepts reflects that economic activity is complex and diverse. To understand all the processes and phenomena associated with it, multiple terms need to be analyzed.