Organisation of the factors of production
Yvonne Harvey, Contributor

Types of production

Hello friends. I will begin this lesson by stating the specific objectives for types of production and levels of production. Types of production will be covered this week, and levels of production will be covered next week. The candidate should be able to:

1. Classify the different types of productive activities.

2. State the types of productive activities carried out in the region.

3. Compare types of production in the region with types of production in more developed countries.

4. List the various production levels and assess their contribution to the economy.

Note that the fourth specific objective relates to next week's lesson.

Definitions are important in principles of business, therefore, we will first define the term, 'production'. Production refers to the combining of the factors of production to create goods and services to satisfy people's wants. The types (stages) of production should not be confused with the levels of production.

The levels of production classify the amounts of goods and services produced under three different headings - subsistence, domestic and surplus/export levels. These levels of production will be considered next week.

When we produce, the activities carried out fall under different headings known as the stages, types or branches of production. Production can be placed under three or four such stages, types or branches.

The three stages of production

a) Primary production

The industries involved in primary production are known as extractive industries. This is the raw material stage of production. Raw materials are extracted from the environment. Examples of primary production include mining, fishing, lumbering, quarrying, agriculture, etc. In the Caribbean, agriculture is an important primary activity. Most Caribbean countries produce sugar cane, bananas, and a variety of fruits.

b) Secondary production

Secondary production is also referred to as the manufacturing and construction stage of production. It cannot take place without primary production. This stage of production involves putting the raw materials extracted at stage one together to make finished or semi-finished goods. It also includes all kinds of construction work. Examples of manufacturing include sugar cane to rum, bauxite to aluminium, lumber to furniture, and coffee beans to coffee etc. Construction involves building of houses, and other structures, roads, bridges, etc.

c) Tertiary production

The third stage of production is also called the service stage. It involves the provision of indirect (impersonal) and direct (personal) services. The indirect services are all those used to distribute the goods produced in the secondary stage of production. These services include those of the wholesaler, retailer, importer, exporter, insurer, etc. The direct services include the services of doctors, nurses, teachers, hairdressers, plumbers, electricians, etc. In the Caribbean, tourism is an important area under tertiary production. The personal touch provided to our visitors earns us much needed foreign currency.

The four stages of production

When considering the four stages of production, the primary stage is the same as when considering three stages. However, the secondary stage will involve only manufacturing and not manufacturing and construction. Construction will fall under the tertiary stage and all services, direct and indirect, will fall under the fourth stage, known as the quaternary stage.

Below, I have provided a diagram, which summarises the four stages of production.

With the information discussed on the three stages of production you can construct a similar diagram to the one above. Your steps will begin with the primary and end with the tertiary.

Most production in the Caribbean region falls under the primary stage of production. Some production will be secondary and a small amount tertiary. In countries that are more developed than those in our region, the majority of productive activity is under the manufacturing, construction and service stages. The implications of this is that primary production does not earn much income for a country, whereas, manufacturing, construction and service industries earn much more income than primary producing industries. Therefore, countries in the Caribbean region need to concentrate on developing activities that fall under the stages beyond the primary stage of production.

Your task this week is to:

a) Define 'production'. (2 marks)

b) Explain what is meant by 'stages of production'. (2 marks)

c) Classify the following areas of production under the appropriate stage (Use three stages of production).

i) bauxite
ii) lumbering
iii) coffee processing
iv) nursing
v) selling
vi) building a school
vii) constructing a road
viii) harvesting cotton
ix) making pots
x) dentistry (10 marks)

d) Discuss the interdependence of the primary, secondary and tertiary stages of production. (6 marks)

Total marks: 20

Next week, I will give you the answers to Part (c) of the question and provide an outline for answering Part (a). In addition, we will cover levels of production.

Take care. See you next week.

Yvonne Harvey teaches at Glenmuir High School.