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

Timesofummah.com – The various work professions that we see every day indicate the existence of economic activities carried out by our society. Some run a business. Some work in the office. Some teach in the field of education. There are those who go around being the spearhead of the company’s income. What’s all that activity for? What do you want to achieve? Grameds, it’s time for us to talk about economic activities. Let’s see together.

Definition of Economic Activities

Economic Activities Definition, History, Types, Purpose, Examples

Humans have many needs which include clothing, housing, food, education, health, information, satisfaction, inner and outer satisfaction, and so on. It can be concluded that these needs are needed so that humans can have guaranteed welfare, prosperity, and satisfaction.

To make it happen, it is necessary to have activities that are able to meet these needs. Therefore, it is necessary to have economic activities based on economic principles so that someone has an income.

In other words, economic activity is human behavior or action that aims to meet the needs of life, which are 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 antiquity. 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, farming, raising livestock. Along with the development of the era, economic activities vary into many.

History of Economic Activities

The world’s economic activities are not immediately like our times today. Before achieving economic activity as it is today, the former community lived an economic life according to the times. The following is a history of the economic activities of ancient society.

1. Nomadic Period

This period is an era where humans do not live permanently in one place. At that time, humans lived in caves or around the water by turning on fire as a heater. Their clothes are made of 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. Cultivation and Breeding 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 the remains of prehistoric artifacts, historians agree that agriculture was first practiced in Mesopotamia (an area known as the fertile crescent) around 8000 BC. The first crops to be cultivated were wheat, barley, chickpeas, chickpeas, and flax.

Meanwhile, animal husbandry activities start from the need to raise animals according to their needs. Cows to plow fields, dogs to prey on nuisance animals, wild horses to be used as mounts, and so on.

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

3. Perundagian period

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

Because human development is very rapid, human needs also increase. Household appliances, kitchen utensils, and weapons, have started to appear in this era. In the perundagian period, humans were familiar with religion and culture.

Because of the many human needs, trade has started to exist. Even trade was carried out by merchants by crossing far inland.

Types of Economic Activities

Judging from its size and scope, the economy can be divided into two categories, namely macroeconomics and microeconomics. Macroeconomics speaks of the overall economy of a country or region. While microeconomics talks about the behavior of consumers and companies.

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, Grameds.

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 are of three kinds, namely the production of raw goods, the production of semi-finished goods, and the production of finished goods. As 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, beverages, clothing, shoes, machines, electronic devices, and others.
  • Trade Production. Example: intermediary, trader, or broker.
  • Service Production. Examples: Consultants, financial management, education, foreign language translators, health services.In carrying out production economic activities there are several factors that affect its smooth running. These factors include nature, labor, capital, and entrepreneurial abilities.

2. Distribution Economic Activities

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

The number of products, area area, nature of the product, cost factors, means of transportation, 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 consider below.

a. Live Distribution

Direct distribution is a distribution activity carried out directly by producers. Starting 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 age of technological advancement, companies that act as large producers also participate in direct distribution. By utilizing social media and marketplaces, large producers are willing to add a system in this distribution, which is engaged in the consumer goods sector.

b. Indirect Distribution

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

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

c. Semi Direct Distribution

Semi-direct distribution is a distribution activity where producers can control distributors but distribution activities are still carried out by distributors. Usually this distribution is used to distribute expensive and luxury goods.

3. Consumption Economic Activities

Consumption economic activity is an activity to consume goods and/or services from producers or distributors to meet the needs of life. 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 utensils, health checks to doctors, and so on. Consumption activities can be identified by the following behaviors:

  1. Done directly (not to be sold and redistributed) to meet consumer wants or needs.
  2. The value of the goods and/or services consumed will run out too, sooner or later.
  3. The goods or services purchased provide added value or benefits to consumers.
    Goods or services used by consumers have transaction value and are obtained through buying and selling.
  4. Consumption activities are very beneficial for the country’s economic activities. Consumption activities can support production activities, assist in adjusting the minimum wage rate for workers, as a starting and ending point for economic activity, and as an effort to reduce state poverty.

However, all that is excessive is certainly not good. Excessive consumptive nature can interfere with the financial health of individuals, families, communities, and countries. Therefore, it needs wisdom in carrying out this consumption activity.

Purpose of Economic Activities

Economic activities are carried out not without purpose. The main purpose of economic activity is to meet the needs of human life. These needs are used for the present and the future. When a person works and earns money, he can provide for his family’s needs.

Below are other objectives of economic activity, namely:

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

2. Resource utilization.
Available resources can be used in order to have a useful value. 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 use 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 that apply in the community. If it is not appropriate, the surrounding community will refuse to carry out economic activities in the area.

For example, the liquor trade in a village will not succeed 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 suitability 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 selected choice.
  6. To launch the country’s economic cycle.
  7. To reduce the country’s poverty rate
  8. Earn income.

Examples of Economic Activities

Below are examples of economic activities that are generally carried out by the community:

  1. Producing chicken pieces, culinary dishes, soap, shoes, and others.
  2. Purchasing raw materials for production.
  3. Rent a truck to transport goods.
  4. Paying labor wages.
  5. Work in an office to market products.
  6. Cooperating 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

Economic activities are divided into three or major sectors, namely:

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, warehousing, quarrying, hunting, and others.

2. Secondary Sector

Economic sectors that process raw goods into finished goods include construction, manufacturing, textiles, automotive, metal smelting, pharmaceutical, chemical, 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, delivery services, restaurant businesses, marketing services, and brochure distribution services.

4. Quarter Sector

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

5. Quinine Sector

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

If Economic Activity Stalls

The state’s economic condition is influenced by its economic activities. The healthier the economic activity, the more prosperous and prosperous the people in the country will be. Prosperity and prosperity make the country peaceful and stable ideologically, politically, economically, socially, culturally, defense and security.

On the other hand, if economic activity falters or declines due to something, such as a pandemic like today, the people will worry about their welfare and prosperity. This concern is not without reason because the stagnation of economic activity has a big effect.

Starting from the number of companies that lost money, housing employees, firing employees, emerging new traders but no buyers, threats of riots and looting, increasing state debt, many projects not being completed, depression, suicide, and others. Pretty terrible isn’t it?

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

About robert fernandez

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