Social Studies, 18.04.2021 14:00 gesteban

Five disadvantages of primary sector

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Definition of Primary products: Raw materials and resources used in the productive process. Examples include metals, agricultural products and minerals.
primary-sector

Advantages of Producing Primary Products
For many developing economies, their main comparative advantage will be in producing primary products. The industry becomes an important source of economic growth, employment, tax revenue and export earnings. Without primary products, countries would be worse off.

Developing economies have a large and elastic supply of labour willing and able to work in these industries.

Doesn’t require costly investment and borrowing to finance investment. The industries can be managed by local workers. Developing economies which have tried to switch to manufacturing have not always been successful because they lack the relative infrastructure, education and human capital

Disadvantages of Relying on Primary Products
inelastic-demand-volatile-prices
Prices are often volatile due to inelastic demand. e.g if there is a ‘good harvest’, supply will increase and there will be a fall in the price of primary products. However, because demand is inelastic, this would lead to a fall in revenue.

coffee-supply-price-growers
The volatile price of coffee – can make planning difficult.
Supply can also be volatile due to weather and disease. For agricultural crops, there is always a risk of crop failure, which could cause economic hardship in one particular year.

Limited resources. One day developing economies may run out of its finite primary products, e.g. precious metals could become scarce. Without diversification, this would leave the economy with a void.

Answer from: jumeljean123oythxy

Prices are often volatile due to inelastic demand. e.g if there is a ‘good harvest’, supply will increase and there will be a fall in the price of primary products. However, because demand is inelastic, this would lead to a fall in revenue.

coffee-supply-price-growers

The volatile price of coffee – can make planning difficult.

Supply can also be volatile due to weather and disease. For agricultural crops, there is always a risk of crop failure, which could cause economic hardship in one particular year.

Limited resources. One day developing economies may run out of its finite primary products, e.g. precious metals could become scarce. Without diversification, this would leave the economy with a void.

Discourages investment in other aspects of the economy. Concentrating on primary products does not always help the long-term development of an economy because it can contribute towards a lack of investment in other aspects such as education and industrial production. Comparative advantage can change over time. It’s important to not just look at the present comparative advantage, but prospects for next 10 or 20 years.

There is a low-income elasticity of demand for primary products. With a rise in global income, there is a proportionately smaller percentage rise in demand for primary products. (agricultural products tend to be income inelastic). Therefore, if you produce primary products, you may see lower rates of economic growth than countries who produce manufacturing goods – which are more income elastic. The Prebisch-Singer hypothesis suggests that countries who concentrate on primary products are vulnerable to a declining terms of trade.

There are 5 points

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Answer from: Quest

imagine me knowing the answer

Answer from: Quest

the factors that the economies of the muslim empires prosper were:

1- land trade routes-located between three continents

2- sea trade routes

trade contributed to the spread of muslim empires, and with that islamic culture led to a growing feeling of internationalism resulted in the transfer of technology, science, and other cultural forms.

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Five disadvantages of primary sector...