Economic Activity: Definition, History, Types, Purpose, Examples

Definition of Economic Activity – The various work professions that we see everyday indicate the existence of economic activities carried out by our society. Some are running a business. Some work in offices. Some teach in education. There are those who go around being the spearhead of the company’s income. What is all this activity for? What do you want to achieve? Sinaumed’s, it’s time for us to discuss economic activities. Let’s see together.

Definition of Economic Activity

To achieve this, it is necessary to have activities that are able to fulfill these needs. Therefore, it is necessary to have economic activities based on economic principles so that someone has income.

In other words, economic activity is human behavior or action that aims to meet the needs of his life, which activity is based on economic principles. Whether we realize it or not, almost every human activity cannot be separated from economic activity.

An employee who works in an office serving customer inquiries also carries out economic activities . An entrepreneur who pays salaries to employees also carries out economic activities.

Economic activity has been going on since ancient times. Because human needs have existed since humans were born and exist on this earth. In prehistoric times, economic activities took the form of hunting, cutting down trees in the forest, cultivating crops, raising livestock. Along with the development of the times, economic activity varies a lot.

History of Economic Activity

1. Nomadic Period

This period is an era when humans do not stay settled in one place. At that time, humans lived in caves or around the waters by turning on a fire as a heater. Their clothes were made from animal skins. Therefore, human economic activity is still in the form of hunting and gathering food from nature.

If the natural resources in the place where they live are reduced, they are willing to walk long distances to find a new place that still has a lot of natural resources. For the division of tasks, they do it based on gender .

2. Farming and Animal Husbandry Period

After millions of years of living in a nomadic way, human civilization is growing. Gradually, humans began to recognize farming and raising livestock.

According to historical records based on prehistoric artifacts, historians agree that agriculture was first practiced in Mesopotamia (the area called the fertile crescent) around 8000 BC. The first cultivated crops were wheat, barley, chickpeas, chickpeas and flax.

While raising livestock originates from the need to raise animals according to their needs. Cows to plow the fields, dogs to prey on nuisance animals, wild horses to ride on, and so on.

In this era, human economic activities used a barter system, namely exchanging goods according to their respective levels.

3. Perundagian period

In this era, humans are more developed. To work on agriculture, humans have used tools made of metal.

Because human development is very rapid, human needs also increase. Household tools, kitchen utensils, and weapons have started to appear in this era. During the time of prostitution, people were familiar with religion and culture.

Because of the many human needs, trade has started to exist. Even trade is carried out by merchants by crossing the mainland.

Types of Economic Activity

Based on work activities, there are several types of economic activities, namely production, distribution, to consuming goods or services. Let’s discuss in more detail below, Sinaumed’s.

1. Production Economic Activities

Production is an economic action to produce goods or services. Later, the goods or services produced will be consumed by the community to meet their needs.

The results of the production process of goods there are three kinds, namely the production of raw goods, production of semi-finished goods, and production of finished goods. Meanwhile, for the type, production is divided into several types, namely:

  • Extractive Production . Example: Petroleum extraction, metal extraction, natural gas drilling.
  • Agricultural Production . Example: vegetables, fruits, rice, and others.
  • Industrial Production . Examples: food, drink, clothing, shoes, machinery, electronic equipment, and others.
  • Trade Production . Example: intermediary, trader, or broker.
  • Service Production . Examples: Consultants, financial management, education, foreign language translators, health services.
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In carrying out production economic activities there are several factors that affect its smoothness. These factors include nature, labor, capital, and entrepreneurial abilities.

2. Distribution Economic Activities

Distribution is one of the economic activities whose function is to distribute goods or services from producers to consumers. This distribution process is very important because it is in this activity that the product can be spread widely and can be consumed by consumers. Without a distribution process, consumers will find it difficult to get the product they need. So that it can be said that distribution activities are activities that link production economic activities and consumption economic activities.

The number of products, the area of ​​the product, the nature of the product, the cost factor, transportation facilities, market conditions, company factors, and means of communication are factors that influence distribution activities.

These distribution activities include marketing products, writing product information correctly and clearly, sorting products, transporting products, selling products at competitive prices, ensuring product stock availability in the market, storing products according to procedures from manufacturers, shopping for products from manufacturers.

Distribution activities are divided into three, namely direct distribution, indirect distribution, and semi-direct distribution. If explained in more detail, we can see below.

a. Direct Distribution

Direct distribution is a distribution activity carried out directly by the producer. From marketing, sales, to delivery. Usually direct distribution is carried out by producers who are still on a small scale because they have a simple system.

However, in this era of technological advances, companies that act as large producers also carry out direct distribution. By utilizing social media and marketplaces , large manufacturers are willing to add more complex systems in order to reach consumers directly. Usually large companies participating in this distribution are engaged in the consumer goods sector.

b. Indirect Distribution

Indirect distribution is distribution activities on a wholesale and retail scale from producers to consumers carried out by distributors only. While manufacturers focus on production only.

Usually the goods distributed indirectly are large in number and the transaction value is large. Therefore, the negotiation process between the two companies and the lengthy production, make this type of distribution requires a relatively long time.

c. Semi Direct Distribution

Semi-direct distribution is a distribution activity where the producer can control the distributor but the distribution activity is still carried out by the distributor. Usually this distribution is used to distribute expensive and luxurious goods.

3. Consumption Economic Activities

Consumption economic activity is an activity to consume goods and/or services from producers or distributors to make ends meet. The perpetrators of this activity are called consumers. If consumer needs are met, then consumers can carry out other economic activities to drive the country’s economic activities.

Examples of consumption economic activities are buying chicken, vegetables, rice, Eid clothes, kitchen equipment, health checks to doctors, and so on. Consumption activities can be recognized by the following behaviors:

  1. Done directly (not for sale and redistribution) to meet the desires or needs of consumers.
  2. The value of goods and/or services consumed will also run out, either sooner or later.
  3. Goods or services purchased provide added value or benefits to consumers.
  4. Goods or services used by consumers have transaction value and are obtained through buying and selling.

Consumption activities are very beneficial for the country’s economic activities. Consumption activities can support production activities , help adjust the minimum wage rate for workers, as a starting and ending point for economic activity, and as an effort to reduce state poverty .

However, everything that is excessive is certainly not good. Excessive consumptive nature can interfere with personal financial health, family, community and country. Therefore, it needs wisdom in carrying out this consumption activity.

Purpose of Economic Activity

Below are other objectives of economic activity, namely:

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1. To get money, profit, and wealth.

To meet our daily and future needs, we need healthy financial strength. Carrying out economic activities is one of the efforts so that we can get income, profits, and wealth so that we are financially healthy.

2. Utilization of resources.

Available resources can be used in order to have value benefits. Resources can be in the form of land, vehicles, natural resources, capital, agricultural products, and so on.

3. Legally binding.

It is called an economic activity if and only if the activity carried out is legal in the eyes of the law. Actions that generate money and wealth by means of robbery, theft, corruption, smuggling, bribery, and the like cannot be called economic activities because they are against the law.

4. Use common sense

To get maximum income and profit, it is necessary to involve common sense or rationality in the utilization of resources. With the right strategy, the same business can get more optimal profits.

5. Socially acceptable

Economic activities that will run smoothly are economic activities that are in accordance with the values ​​and social norms prevailing in that society. If it is not appropriate, the surrounding community will reject the ongoing economic activity in the area.

For example, the liquor trade in a village will not be successful if the people in that area uphold religious, moral and health values. Then the liquor trade there will go bankrupt.

  1. To determine which goods and services are needed to meet the needs of life.
  2. To clarify the conformity of the product to the needs.
  3. To find out the difference in the quality of goods and services that must be used.
  4. To determine the priority scale of needs.
  5. To be a consideration of the pros and cons of the specified choice.
  6. To expedite the country’s economic turnover .
  7. To reduce the country’s poverty rate
  8. earn income.

Examples of Economic Activities

  1. Producing chicken pieces, culinary dishes, soap, shoes, and others.
  2. Purchasing raw materials for production.
  3. Hire a truck to transport goods.
  4. Pay labor wages.
  5. Work in the office to market products.
  6. Cooperate with factories to distribute food and beverage products in supermarkets.
  7. Become a writer, teacher, and content creator for education.
  8. Buying company shares so that the company can run operations because it gets capital.
  9. And others.

Sectors of Economic Activity

1. Primary Sector

The main sectors of the economy are mostly engaged in the production or extraction of raw materials which include agriculture, forestry, grazing, mining, storage, quarrying, hunting, and others.

2. Secondary Sector

The economic sectors that process raw goods into finished goods include construction, manufacturing, textiles, automotive, metal smelting, pharmaceutical, chemical industries, and others. The secondary sector employs both organized and unorganized workers.

3. Tertiary Sector

This sector generally indicates a service industry whose economic activities include the sale of products from the secondary sector. This sector also provides commercial services to other sectors and the general public. Examples of the tertiary sector are wholesale and retail distributors, goods delivery services, restaurant businesses, marketing services, and brochure distribution services.

4. Quaternary Sector

This sector has close links with the tertiary sector but its activities require specific intellectual skills related to technological innovation. Examples of economic activities included in this sector are the fields of information technology, education, research, culture, and libraries.

5. The Kuinary Sector

This sector consists of professional institutions which tend to be exclusive and involved in the work of universities, government, science, health, and so on.

If Economic Activity Stalls

The country’s economic condition is influenced by its economic activities. The healthier the economic activity, the more prosperous and prosperous the people in the country. This prosperity and welfare makes the country peaceful and stable ideologically, politically, economically, socially, culturally, defense and security.

On the other hand, if economic activity stagnates or slumps due to some reason, for example a pandemic like now, then the people will be worried about their welfare and prosperity. This concern is not without reason because the result of the stagnation of economic activity has a big effect.

Starting from the many companies that are losing money, employee housing, employee layoffs, new traders appearing but no buyers, threats of riots and looting, increasing state debt, many unfinished projects, depression, suicide, and so on. Pretty terrible right?

The synergy formed between the government, corporate agencies, and educational institutions is an important key to moving the economy.