1.2.1 Production
a) The factors of production:
Land - All natural resources that are used to produce goods and services.
Labour - The human effort used in the production of goods and services.
Capital - All man-made resources used to produce goods and services.
Enterprise - The ability to take on risks, manage a business, and combine the factors of production to create goods and services.
b) Sectors of the economy:
Primary - Involves the extraction of raw materials.
Secondary - Manufacturing the raw materials from the primary sector into finished goods.
Tertiary - Focuses on the provision of services rather than goods.
c) Changes in the importance of these sectors in terms of employment and output over time in developing and developed economies.
Developing Economies
Primary Sector: In developing economies, the primary sector is initially the most significant as it employs a large proportion of the population. Over time, its importance decreases as economies industrialise and the use of machinery reduces the need for labour.
Secondary Sector: As manufacturing and construction expand due to industrialisation, more jobs are created in the secondary sector which grows over time.
Tertiary Sector: The tertiary sector is usually less significant in developing countries however becomes more significant as income levels rise and services like education, healthcare, and retail begin to play a larger role in the economy.
Developed Economies
Primary Sector: In developed economies, the primary sector has minimal contribution to employment and output as raw materials are usually imported for cheap from less developed countries.
Secondary Sector: The secondary sector also becomes less significant over time as manufacturing processes are automated or outsourced to developing economies.
Tertiary Sector: The tertiary sector accounts for the majority of employment and output in developed countries due to the growing demand for high-value services.