Pros & Cons of Primary Production

If you’ve ever had a career in basic industries, you would know that the primary sector is essential as it provides the raw materials that factories or secondary industries need to manufacture goods. The primary, secondary, and tertiary sectors work together to build a manufacturing chain that delivers completed goods or services to clients.

What is Primary Production?

Primary products are materials and resources needed in the manufacturing process. Metals, agricultural goods, and minerals are a few examples.

Primary production means obtaining raw resources. Metals and coal, for example, must be mined; the oil must be dug from the earth; rubber must be extracted from trees; crops must be grown; fish must be trawled. It is alluded to as extractive production. Learn more about Pros & Cons of Primary Production at

The Pros of Primary Production

Here are some of the benefits of primary production:

  1. Many developing economies’ significant advantage will be in raw material production. The industry contributes positively to economic development, employment, tax income, and export revenues. Countries would suffer if essential goods were not available.
  2. An ample and flexible labor supply in developing economies is eager and ready to operate in these industries.
  3. It does not need costly investment or debt to finance an acquisition, and local personnel can handle the industry. Developing nations that have attempted to transition to production have not always been effective due to a lack of infrastructure, education, and human capital.
  4. It is a crucial source of foreign currency and export earnings.
  5. It attracts foreign direct investment. China has been engaging across Central Africa to increase raw material availability. It has included the construction of roads and trains, which will have broader economic advantages beyond exporting primary resources.
  6. Primary product businesses can serve as a springboard for economic development if export proceeds are reinvested in various parts of the economy.

The Cons of Primary Production

Here are some drawbacks to primary production:

  1. Prices are frequently variable as a result of inelastic demand. For example, if there is a “good harvest,” production will increase, and the value of primary items will decline. However, because supply is insignificant, this would decrease revenue.
  2. Weather and illness can also have an impact on supply. Crop failure is always a concern for crops and can create economic hardship in a year.
  3. Resources are scarce. One day, developing economies may run out of their limited primary goods, such as precious metals. Without diversity, the economy would be left blank.
  4. It reduces investment in other areas of the economy. Concentrating on primary products may not necessarily aid an economy’s long-term growth since it might lead to a lack of expenditure in other areas like education and industrial output.

A comparative advantage shifts with time. It is critical to consider the current comparative advantage and the possibilities over the next 10 or 20 years.

       5. Demand for basic items has low-income elasticity. When global income rises, consumption of primary products rises by a correspondingly lesser percentage. (Agricultural goods are often income inelastic.)

As a result, producing essential items may result in a lower economic growth rate than producing industrial commodities, especially during periods of high unemployment.

According to the Prebisch-Singer theory, nations focusing on basic products are susceptible to falling trade terms.

6. Tyranny of Resources This is the claim that a country with abundant natural resources may struggle and attain low levels of economic well-being. This tragedy of the commons can happen for a variety of reasons.

    1. As opposing parties battle for possession of diamond mines, expensive resources can cause conflict that leads to corruption and violence.
    2.  Resources are frequently owned by a tiny segment of society, and a nation’s resources are poorly distributed.
    3. Easy money derived from natural resources might stifle economic progress in other sectors.

Evaluating Primary Production

Primary products have limits, but they can offer a foundation for a country to generate export earnings. It depends on the country’s ability to invest and strengthen the economy through export earnings.

In theory, a state can use a buffer stock plan to stabilize the pricing of volatile agricultural goods. Attempts have been made to establish buffer stock plans for wool, coffee, and other items.

However, it is challenging for the government to regulate and stabilize prices in practice since other nations may take advantage and enhance supply, making it unfeasible to continue purchasing the surplus.

Learn more about different types of production units, on this website:

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Libby Austin

Libby Austin, the creative force behind, is a dynamic and versatile writer known for her engaging and informative articles across various genres. With a flair for captivating storytelling, Libby's work resonates with a diverse audience, blending expertise with a relatable voice.
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