The levels of production

HI, EVERYONE! In part (c) of last week’s assignment, you were to classify certain areas under the appropriate stage of production, using the three-stage method of classification. Part (d) required a discussion of the interdependence of the primary, secondary and tertiary stages of production.

Here are the answers to part (c) of the question.

(i) Bauxite – primary stage

(ii) Lumbering – primary stage

(iii) Coffee processing – secondary stage (iv) Nursing – tertiary

(v) Selling – tertiary

(vi) Building a school – secondary stage (vii) Constructing a road – secondary stage

(viii) Harvesting cotton – primary stage (ix) Making pots – secondary stage (x) Dentistry – tertiary stage

Below is an outline for part (d) of the question.

PRIMARY STAGE – RAW MATERIAL STAGE

Raw materials are necessary for the secondary stage to take place, i.e., manufacturing and construction which is done at the secondary stage uses raw materials from the primary stage. For example, pottery making in the secondary stage makes use of clay from the primary stage; and furniture manufacturing in the secondary stage uses lumber from the primary stage. At the tertiary stage, direct and indirect services make use of what is produced at the secondary stage; e.g., distribution of goods as an indirect service involves the use of vehicles produced at the secondary stage. Also, in order to provide direct services, individuals make use of things produced at the secondary stage; e.g., the dentist makes use of dental equipment produced at the secondary stage. Thus, no stage of production is independent. Secondary depends on primary, and tertiary depends on secondary.

Let us now move on to look at the levels of production.

THE LEVELS OF PRODUCTION

The term ‘levels of production’ refers to the amount that is produced. It is a way of classifying production. The amount that is produced, or the level of operation of production of a country, is affected by the resources available and the extent to which a country is able to exploit the resources available.

There are FOUR main levels of production:

1. SUBSISTENCE PRODUCTION (TRADITIONAL PRODUCTION)

When a country is producing at the subsistence level, it is producing the amount that is only able to meet the basic needs of the country. This level of operation enables the country to survive, but it is not enough to improve their standard of living or their way of life. At this level of production, the country has little or no surplus production. What little surplus there is, is exchanged locally in the market places.

Subsistence production is usually found where agriculture is the main economic activity. Agriculture, however, is affected by drought and other climatic problems. Though this level of production is not common today, it can still be found in some very poor countries, where the way of living is simple, such as parts of Bangladesh and rural communities of

Africa, Asia and Latin America. There are also tribes in the Amazon forest that still produce at this level.

Although this level of production is not very efficient and requires many hours of hard work, a major advantage is that where it is practised, self-sufficiency is evident.

2. DOMESTIC PRODUCTION (LOCAL PRODUCTION)

This level of production involves the quantity that is produced locally by a whole nation using the resources of the country available to them. Thus, it does not include any imports from foreign countries. The economy is dependent, therefore, on what it produces. This level of production tends to produce a definite surplus, which results in exchange locally, and so there is a lot more commercial activity than there is at the subsistence level of production.

The governments of many developing countries, including those in the Caribbean region, encourage domestic production in order to foster self-reliance. However, many find themselves in the position where, though self-reliance is desirable, they have to import goods and services to supplement what is produced, depriving local producers of a market. Many developed countries, such as the USA, try to grow all the food they need because they have the natural and human resources to be able to do so.

3. THE SURPLUS LEVEL OF PRODUCTION

This level is also known as cash-crop economy. Countries that produce at this level are usually the ones that have many resources and advanced technology; e.g., USA, Britain and Germany. Such countries are not only able to satisfy domestic demands, but are also able to produce a surplus

4. THE EXPORT LEVEL OF PRODUCTION

Once a surplus is being produced consistently and it is of a certain amount, it can be exported to other countries and earn foreign exchange. They are thus able to experience a better quality of life than countries at lower levels of production.

The various Caribbean territories are at different stages in the development of their levels of production. Still, most CARICOM countries, if not all, produce sugar and at least one fruit at the export level, and none operate at the subsistence level for the entire economy.

That’s it for now. Next week, we will discuss the characteristics of cottage industries.