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Growth of the Primary Sector and its Benefits

Discuss whether or not the growth of the primary sector is beneficial to a country.

Category:

Market Structures and Competition

Frequently asked question

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Answer

Use proper citation and referencing techniques to give credit to the original sources of information.

The growth of the primary sector, which includes activities related to extracting or harvesting natural resources, can have both beneficial and detrimental effects on a country. Let's examine both sides of the argument:
Why it is beneficial:
➡️1. Increased total output and economic growth: A thriving primary sector can contribute to increased total output and economic growth. Expanding agricultural, mining, or energy sectors can lead to higher production levels, generating additional income and contributing to overall economic expansion.
➡️2. Employment opportunities: The primary sector often provides employment opportunities that are accessible to a wide range of individuals, including those with lower skill levels or limited access to education. This can help reduce unemployment and alleviate poverty in rural areas, improving living standards.
➡️3. Raw materials for secondary sector: The primary sector supplies raw materials, such as minerals, timber, and agricultural products, to the secondary sector. These resources are essential for manufacturing and industrial activities, supporting the growth and development of downstream industries.
➡️4. Food security and import reduction: A strong primary sector can ensure food security by producing sufficient agricultural goods domestically. This reduces dependence on imports for essential food items and can contribute to a favorable trade balance, reducing the current account deficit.
Why it is not beneficial:
➡️1. Low productivity and value-added: The primary sector is often characterized by low productivity and limited value-added activities. This means that the sector may contribute a smaller share to overall GDP and may not generate significant income or innovation compared to other sectors.
➡️2. Low wages and poor working conditions: Workers in the primary sector may face low wages and poor working conditions, particularly in regions with weaker labor regulations. This can lead to income inequality and social challenges, impacting the overall welfare of individuals involved in primary sector activities.
➡️3. Overdependence and sectoral imbalances: Excessive reliance on the primary sector can lead to imbalances in the economy. If the primary sector grows at the expense of the secondary and tertiary sectors, it can hinder diversification and limit the overall development of the economy.
➡️4. Vulnerability to natural disasters and price fluctuations: Primary sector activities, such as agriculture and mining, are often susceptible to natural disasters, adverse weather conditions, and price fluctuations in global commodity markets. These factors can disrupt production, lead to income volatility, and hinder stability in the primary sector.
➡️5. Depletion of natural resources: The primary sector heavily relies on finite natural resources. Overexploitation and depletion of resources, such as minerals or fossil fuels, can have long-term consequences, including environmental degradation and the loss of future income streams.
In conclusion, the growth of the primary sector can have both positive and negative impacts on a country. While it can contribute to economic growth, employment opportunities, and food security, it also presents challenges such as low productivity, labor issues, sectoral imbalances, vulnerability to natural disasters, price fluctuations, and resource depletion. Balancing the development of the primary sector with the growth of other sectors and implementing sustainable practices are essential for maximizing the benefits while minimizing the drawbacks.

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I. 🍃Introduction
- Brief explanation of the primary sector and its importance in the economy

II. Benefits of the primary sector
- Increased total output of the economy
- Employment opportunities for low-skilled workers
- Improved standards of living in rural areas
- Raw materials for secondary sector
- Food security and reduced imports

III. Drawbacks of the primary sector
- Low productivity and value added
- Low wages and poor working conditions
- Overdependence on primary sector
- Disruptions from weather and natural disasters
- Inelastic supply and demand leading to price fluctuations
- Depletion of natural resources

IV. 👉Conclusion
- Summary of benefits and drawbacks
- Importance of balancing primary sector with other sectors for sustainable economic growth.

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In assessing each answer, use the table opposite. Why it is beneficial:
• can increase total output of the economy, increasing economic growth
• can provide employment opportunities that are accessible to all / requires low skill / requires low technology
• could increase standards of living in rural areas
• provide raw materials for secondary sector
• could ensure that country has food security, reduce imports of necessities, if prices of primary sector products are high e.g. high oil price which this could bring huge export revenue to the country. This could reduce current account deficit. Why it is not beneficial:
• productivity may be low in the primary sector, very low value added
• may be low wages and poor working conditions
• overdependence on primary sector may restrict growth of secondary and tertiary sectors
• some primary industries may be disrupted by weather conditions and natural disasters
• supply and demand are inelastic so there may be considerable price fluctuations
• natural resources e.g. copper may be depleted.

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