Economy : Understanding and its evolution, Economics vs Economy, Sectors of Economy

 

The Evolution of "Economy":

• The word economy is a Greek word which means "household management." 
• Economics as an area of study was touched on by philosophers in ancient Greece, notably Aristotle, but the modern study of economics began in 18th century Europe and the  Scottish philosopher Adam Smith, who in 1776 wrote the famous economic treatise The Wealth of Nations, was thought of in his own time as a moral philosopher. 
• He and his contemporaries, believed that economies evolved from pre-historic bartering systems to money and eventually credit-based economies.

UNDERSTANDING THE ECONOMY----

Production, exchange and consumption of goods and services are the basic economic activities. There are three basic questions in an economy ie

• What is produced and in what quantities
• How are these goods produced 
• For whom are these goods produced

In the course of these basic economic activities, every society has to face scarcity of resources and it is the scarcity of resources that gives rise to the problem of choice. 

Eg India have 2.4 % of land area in world while it has 18 % of world population. 

ECONOMICS VS ECONOMY :

• Economics is about the optimum decisions about the choices to use its scarce resources in the given economic system to meet the needs of the population.
• Economics aims to comprehend and explain how choices are made in the face of scarce  resources by evaluating the behaviour of different agents in the economy.I
• It digs into the concepts, theories, and frameworks that support production, distribution, and consumption decision-making processes.

                                                                        while 

• Economy represents the large set of inter-related production and consumption activities and  real-world implementation of economic principles and systems. 
• The economy encompasses  everyone from individuals to entities such as corporations and governments.

SECTORS OF ECONOMY:

For better understanding of the functioning of an  economy, an economy can be classified in various sectors. Basically it can be classified as primary ,secondary and tertiary sectors. Now a days tertiary sector can further be classified as Quaternary sector and quinary sector.

PRIMARY SECTOR—

• As the primary means “the basis ”,so this sector is the basis of all other sectors.
• All the subsequent  activities /sectors are dependent upon this sector. 
• This sector includes all the activities  having a direct connection to the environment or in which goods are produced by exploiting natural resources . 
• Since most of the natural products we get are from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector along with Mining (extraction of buried material below the surface) and quarrying (Anything extracted from above the surface of earth) which includes oil extraction, coal mining etc. 
• People involved in the primary activities of an economy are also termed as red collar workers due to their association with activities of outdoor nature.

SECONDARY SECTOR--

• The secondary sector is subsequent to the primary sector.
•  It covers all the activities in which natural products are changed into other forms through ways of manufacturing processes. 
• Such processes are  associated with industrial activity. 
• People involved in the secondary sectors of the economy are termed as blue collar workers of the economy.

TERTIARY SECTOR—

• Activities of this sector don’t produce a good at their own. 
• Rather these activities  help in the development  of the primary and secondary sectors. 
• This sector produces intangible goods and are referred to as services.

QUATERNARY SECTOR--- 

Tertiary sector can further be classified into The quaternary and Quinary  sector of the economy .

It refers to describe a knowledge based part of the economy - which typically includes services such as information technology, information-generation and -sharing, media ,research and as well as knowledge-based services like consultation, education, financial planning etc.

QUINARY SECTOR: 

• Part of economy that is involved in decision making eg all the top executives involved in decision making like bureaucrats .  
• Professional under this category often referred as 'gold collar' professionals.

Financial vs Real Economy : 

Economy can also be classified as financial and Real sector .

Financial sector comprises of those aspects of the economy that deals purely with the transaction of money and other financial assets .

                                                                            while 

Real sector encompasses all non-financial enterprises related to production, purchase of goods and services .

Sunrise Industry:

• Sunrise industry is a term used for a sector that is just in its infancy but shows promise of a rapid boom. 
• The industry is typically characterized by high growth rates, high degree of innovation and generally has plenty of public awareness about the sector and investors get attracted to its long-term growth prospects.
• Examples
  
  : Information Technology, Telecom Sector, Healthcare, Infrastructure Sector, Retail Sector and Food Processing Industries.