THE ECONOMY OF THE EUROPEAN UNION

THE ECONOMIC SECTORS1

INDUSTRY AS A SYSTEM

INPUT•Labour•Capital•Land or natural

resources•Entreprise

PROCESSES•Assembling•Maintenance•Packaging•Transport

OUTPUT•Product•Profit

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INPUTS OR FACTORS OF PRODUCTION

• INPUTS are the things that go into the system. The main four inputs are:• Labour either skilled or unskilled.• Capital is the name given to items necessary to

produce a good or service. Examples of capital are machines, buildings and money.

• Land. These include sun, soil and water in primary industries and raw materials such as cotton, steel, coal, wood…

• Enterprise is the most important factor of production as this is the process of bringing together the other factors to produce a good or service.

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PROCESSES

• PROCESSES are all things that happen to those inputs to help turn them into outputs. These include:• Production for example the manufacturing of

cars or the sewing of textiles.• Factory maintenance, which is necessary to

keep machines in working order.• Packaging, which protects products during

transit and presents them in a way that makes customers want to buy them.

• Transport, which is needed to move products from the factory to the warehouse and then on to the shops.

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FEEDBACK

• FEEDBACK includes anything that improves the system, such as:• Customer feedback. Companies find out

what consumers think of their products through market research.

• A profit is the money left over after inputs (staff wages, raw materials…) have been paid for. Profits need to be high enough to make it worthwhile for the company to continue investing in making the product.

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THE ECONOMIC SECTORS

Economic activities can be classified into 4 areas according to what they do

PRIMARY •Businesses that extract raw materials from natural resources.

SECONDARY•Businesses that turn raw materials into finished products.

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THE ECONOMIC SECTORS

TERTIARY• This sector involves

the provision of services to consumers and businesses.

QUATERNARY• This sector consists of

those industries providing information services and R&D

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THE PRIMARY SECTOR

Examples of primary businesses include:

AGRICULTURE•Includes:

• Production of crops.• Rearing of animals.

FORESTRY•Includes:

• Planting and taking care of trees.

• Tree felling.• Christmas tree growers.

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THE PRIMARY SECTOR

Examples of primary businesses include:

MINING•Includes the extraction of:

• Valuable minerals.• Coal mines.• Oil and gas extraction.• All types of quarrying.

FISHING•Includes:

• Fishing fleets.• Salmon farms.• Trout farms.

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THE SECONDARY SECTOR

Secondary sector

includes:

EngineeringThis includes the design and use of equipment such as telecommunications

ConstructionThis includes all types of building aswell as the people who work on building sites.

ManufacturingThis includes the production of goodsin large quantities.

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THE TERTIARY SECTOR

• Tertiary businesses can be classified into 3 types:

Private services Public services Voluntary services

Services sold by privately-owned businesses

Services provided by central or local government

Services provided by charity and voluntary organisations.

Examples: Examples: Examples:

• Banking• Distribution• Entertainment• Retailing• Tourism• Transport

• Health care• Education• Military activity• Social services

• Community Health• Social and

community care• Wildlife protection• Environmental

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THE QUATERNARY SECTOR

• The quaternary sector consists of those industries providing:• Information

• Computing and Information and Communication Technologies (ICT)

• Consultancy

• Research and Development and Innovation

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THE EMPLOYMENT STRUCTURE

• It shows how the labour force is divided between the primary, secondary and tertiary sectors.

• According to economic development it can be distinguished between:• More Economically Developed Countries

(MEDCs)• Less Economically Developed Countries

(LEDCs)• Developing countries 13

ACTIVITY 1

Locate on the map five MEDC and five LEDC

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THE EMPLOYMENT STRUCTURE

• In the richest countries there will usually be more people working in the tertiary and quaternary sectors.

• In the poorest countries there tend to be more people working in the primary sector.

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ACTIVITY 2Look at the following statistics concerning the percentage distribution of the labour force by occupation

Primary Secondary Tertiary Total Continent

Afghanistan 80 10 100

Andorra 0,30 78,90 100

Australia 21,10 75,3 100

Bangladesh 11 26 100

Bolivia 40 43 100

Brazil 14 66 100

Burundi 93,60 2,30 100

Costa Rica 22 64 100

Egypt 17 51 100

Iceland 3 78 100

Japan 4,40 27,9 100

Maldives 22 18 100

New Zealand 7 74 100

USA 20,3 79 10016

ACTIVITY 2

• Complete the table of statistics.• Write down in last column the continent to which each

country belongs.• What are the three countries with a high percentage of their

labour force working in the tertiary sector? • Are they MEDC or LEDC?• Name three countries with a high percentage of their labour

force working in the primary sector?• Are they MEDC or LEDC?• Is there a Less Economically Developed Country with a high

percentage of its labour force working in the tertiary sector? Why?

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ACTIVITY 3

• Look at the diagram below. Based on the employment structures which countries do you think are the richest and the poorest?

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