Basic industry or primary industry is an important aspect of businesses. Without this industry, other industries cannot function. Also, the basic food we eat daily will not be available. This article explains this in detail.
Definition of Basic Industry
1. It can be defined as is a type of industry that involves the extraction of raw materials from the land, water, and air.
2. It can also be referred to as an industry that extracts raw materials and supplies them to manufacturing and construction companies.
A type of industry. There are other types of industry. These are the manufacturing, construction, capital goods, intermediate, and consumer goods industries. Also, there exist banking and insurance firms. When we classify businesses based on basic, capital goods, intermediate, and consumer goods companies, it is referred to as used-based classification. In another post, I wrote on size-based classification. Read here.
Extraction of raw materials. Raw materials are extracted from the land, sea, and air. Raw materials discovered from land include trees, edible plants, sand, stones, rocks, copper, gold, silver, crude oil, and more. From the sea, fishes, water, limestone, crude oil, sand, etc. From the air, the sun, oxygen, nitrogen, among other gases. This raw material is then sold to other businesses. These firms convert, refine, or process the raw materials into a more usable form.
Sold to other companies. The raw materials are sold to other companies. Sand and stones are sold to construction businesses to build houses, bridges, and roads. Fish, edible plants are sold to consumer goods firms. Also, the sun, although not sold, is converted to solar energy which is used in electric vehicles and to provide electricity.
Importance of Basic Industry
The basic industry extracts raw materials. Without them, there might be no other kind of business. It is these firms that provide or extract everything that is used by other companies. If you owned a bakery, for example, you need flour, sugar, butter, and more. Most of these ingredients are from the basic firms.
Basic companies extract raw materials from land, sea and air. These materials are further converted to other usable forms. Examples of these materials are crude oil, solar energy, copper, limestone, oxygen, fishes, economic trees, and edible plants.