UNIT TWO - MODULE TWO
Economic activity
Economic activity is the production and distribution of goods and services at all levels.
Economic activity and expected future levels of it have an important influence on
security prices because of the interrelationship between economic activity and corporate
profits, inflation, interest rates, and other variables. One frequently used measure of
economic activity is the gross domestic product.
A nation’s economy can be divided into various sectors to define the proportion of the
population engaged in the activity sector. This categorization is seen as a continuum of
distance from the natural environment. The continuum starts with the primary sector,
which concerns itself with the utilization of raw materials from the earth such as
agriculture and mining. From there, the distance from the raw materials of the earth
increases.
Primary Sector
The primary sector of the economy extracts or harvests products from the earth. The
primary sector includes the production of raw material and basic foods. Activities
associated with the primary sector include agriculture (both subsistence and commercial),
mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying. The
packaging and processing of the raw material associated with this sector is also
considered to be part of this sector.
In developed and developing countries, a decreasing proportion of workers are involved
in the primary sector. About 3% of the U.S. labour force is engaged in primary sector
activity today, while more than two-thirds of the labour force was primary sector workers
in the mid-nineteenth century.
Secondary Sector
The secondary sector of the economy manufactures finished goods. All of manufacturing,
processing, and construction lies within the secondary sector. Activities associated with
the secondary sector include metal working and smelting, automobile production, textile
production, chemical and engineering industries, aerospace manufacturing, energy
utilities, engineering, breweries and bottlers, construction, and shipbuilding.
Tertiary Sector
The tertiary sector of the economy is the service industry. This sector provides services to
the general population and to businesses. Activities associated with this sector include
retail and wholesale sales, transportation and distribution, entertainment (movies,
television, radio, music, theater, etc.), restaurants, clerical services, media, tourism,
insurance, banking, healthcare, and law.
In most developed and developing countries, a growing proportion of workers are
devoted to the tertiary sector. In the U.S., more than 80% of the labour force is tertiary
workers.
Quaternary Sector
The quaternary sector of the economy consists of intellectual activities. Activities
associated with this sector include government, culture, libraries, scientific research,
education, and information technology.
Quinary Sector
Some consider there to be a branch of the quaternary sector called the quinary sector,
which includes the highest levels of decision making in a society or economy. This sector
would include the top executives or officials in such fields as government, science,
universities, nonprofit, healthcare, culture, and the media.
An Australian source relates that the quinary sector in Australia refers to domestic
activities such as those performed by stay-at-home parents or homemakers. These
activities are typically not measured by monetary amounts but it is important to recognize
these activities in contribution to the economy.
Primary Sector Agriculture
Agricultural systems can be divided into broad categories. These categories often overlap
and are sometimes inconsistent.
 Commercial/subsistence agriculture
 Intensive/extensive agriculture
 Arable/pastoral/mixed agriculture
Commercial/subsistence agriculture
- Commercial
 farmers produce crops and livestock for sale
 system can also be called ‘cash cropping’
 products sold are called commodities
 wheat, soya beans, tea, coffee, sugar, cotton and orange juice
-
Subsistence
 farmer produces food for the family’s consumption
 more common in LDC’s
 some farmers practice both subsistence and commercial
Intensive/extensive agriculture
- Intensive
 related to quantity of labour or capital that is used per hectare of land
 high labour and capital input
 money is spent on machinery, buildings, fertilizers etc.
-
Extensive
 inputs are low per hectare
 this means less capital and labour
 it must be noted that intensity relates to the ratio of capital and land inputs to an
area of land. E.g. in America Midwest, expensive tractors and harvester are
bought but the land is no large that it is still considered extensive.
Arable/pastoral/mixed agriculture
- Arable
 growing of crops such as cereals
 includes plantation which produce crops such as coffee, rubber, orchards and
horticulture
 when a single crop is grown for many years it is called monoculture
-
Pastoral
 the rearing of livestock
 includes milk and beef production together with pig, sheep, goat and poultry
-
Mixed
 when both arable crops are grown and animals are reared, the agriculture is
‘mixed’
ASSIGNMENT: Obtain a listing of all the different types of farming practices in the
Caribbean
The factors which influence farming
There are many factors which influence farming in the Caribbean region. These include
environmental, economic, cultural and political factors.
Environmental factors:
 Climate – Climate affects precipitation in the following ways: type, frequency,
intensity and amount. Climate also affects temperature which would affect
growing seasons. in the Caribbean we are exposed to mainly two seasons, the dry
season and the rainy season. This means that is fairly easy to adjust farming
techniques to suite the climatic conditions. For example, in Trinidad up until
2000, sugar-cane was a crop grown and refined mainly for export. During the
rainy season the cane plant was cultivated and nurtured and during the dry season
when the plants were mature, it was harvested and then refined into sugar for
domestic and industrial use in confectionary factories.

Soil – this factor includes fertility in terms of pH, cation exchange capacity and
nutrient status. It also includes: structure, texture and depth. Most Caribbean
countries possess fertile soils in various areas of the island. The problem arises
when land use affects soil and agriculture. For example, in Trinidad, most of the
country’s most fertile soil is located on the east-west corridor, but most of this
land is providing settlement for the country’s population instead of being used for
agriculture. Land once used for the sugar cane industry has now been converted to
settlements for people.

Pests – These include vermin, locusts, disease etc. Common pests encountered in
the Caribbean include: the sugarcane borer, root weevils, the coffee berry borer,
moths, mealy bug, insects etc.

Slope – a lot of the Caribbean countries do possess land of high gradients. This
has been a major obstacle for the farming industry. For crop cultivation until
recently, a 5 degree slope was the maximum for mechanized ploughing but
technological improvements have increased this to about 11 degrees. Slopes can
also be terraced to allow for crop cultivation as is done on the slopes of northern
Trinidad. Slopes also impose the added problem of irrigation when water is not
readily available. For animal rearing, slopes do cause a major problem since most
animals are not able to graze and live along slopes in the Caribbean.
Economical factors which influence farming
This relates to the costs of farm production and the revenue earned by selling produce. If
the cost of producing crops or livestock is greater than the price at which they can be
sold, the farmer make a loss and eventually will have to switch production or stop
farming altogether. This has occurred in many Caribbean countries over the past few
years. Governments often intervene and subsidize farmers. For example, in the EU, most
hill farmers would go out of business without the financial supports provided by the
Common Agricultural Policy.
Economic factors include the following:
 farm size
 demand related to size and type of market
 capital i.e. equipment, machinery, seeds etc
 technology i.e. fertilities, irrigation etc
 infrastructure i.e. roads, storage etc
Cultural Factors which influence farming
Cultural and social factors are often considered as the same. These influence land tenure
and farm size. Cultural influences such as religion are sometimes also important. Land
tenure is how land is owned. In Britain, most farm land is either owned directly by
farmers or is rented by tenant farmers from landowners. The tenant farmers are legally
protected from eviction once they act reasonably and they can pass their farms onto their
children. This security of tenure is important because it gives farmers an incentive to
improve their land and conserve its fertility. In countries where tenants have no security
or where farms are organized into large estates, there is less incentive for individuals to
improve the long term productivity of the land. This is commonly the case in most
Caribbean countries. For this reason, land reform which is the breaking up of larger lands
into smaller pieces is practiced in many parts of the world. This is the case in Europe,
Italy and Spain and also parts of South America. The process is rarely easy to perform
since estate owners are against the movement.
Political factors which influence farming
The CAP is considered to be a major political influence on the UK and the EU. It was
developed in the 1960’s by members of the Common Market, now called the European
Union (EU). The policy had five main aims:
 to increase farm productivity
 to ensure a fair standard of living for farmers
 to stabilize markets
 to assure food supplies
 to provide consumers with food at reasonable prices.
The CAP sets guaranteed minimum prices for most farm products. If the market price
falls below this level, the surplus is bought and put into storage. To prevent foreign
produce from undercutting CAP prices, import tariffs are places on imported foodstuffs.
The scheme has worked so well in the EU that there are now lots of surplus food in
warehouses. This storage for wine and milk etc has now become a burden in the EU.
A similar concept has been adopted in many Caribbean countries.
E.g. Trinidad …