Economic and Non-Economic Activities

The subject “Economics” can be defined as a social science concerned with production, distribution and consumption of various goods and services. It deals with how governments, businesses, as well as individuals allocate available resources to satisfy their requirements. It also further propagates how the above category should work together in an effort to maximise their output for different activities.

Economics can be broadly classified into two categories – 

  • Macroeconomics - This deals with the economic activities of an aggregate economy. 

  • Microeconomics - This concentrates on the economic activities of individuals and businesses.

But, what does economic activity refer to? On the other hand, what does non-economic activity imply? Read on to learn more.

What Do Economic Activities Include?

Economic activity refers to the activities of producing, purchasing, selling and distribution of goods and services that involve monetary transactions. In other words, it can be defined as the process through which a stock of capital or resources produces a flow in the output of goods and services that individuals can utilise for the satisfaction of their requirements.

This entire process not only involves the production of goods and services but also their distribution among different individuals in a community. 

Pertaining to the types of economic activities undertaken, an economy can be divided into three or five broad sectors. These are –

  1. Primary Sector – 

The primary sector of an economy mostly involves production or extraction of raw material. Primary economic activities include agricultural activities (both commercial and subsistence), forestry, mining, grazing, quarrying, fishing, hunting as well as gathering. 

Processing raw material and their packaging are also included under this sector. 

India is a country where a large portion of the population is engaged in the primary sector, especially agriculture.

  1. Secondary Sector – 

This is the sector of the economy, which is involved with the production of finished goods from the raw material supplied by the primary sector. This sector involves all the manufacturing, processing and construction jobs of an economy.

Few of the activities that are associated with this sector include the likes of smelting, metalworking, textile and automobile production, construction work, work at chemical and engineering industries, etc. This sector employs a mixture of organised and unorganised workers.

  1. Tertiary Sector

The tertiary sector mostly denotes an economy’s service industry. In this sector, the economic activities include selling goods produced by the secondary sector, as well as providing commercial services to the general population and other sectors of the economy.

The economic activities undertaken in the tertiary sector include wholesale and retail sales, restaurant business, distribution and transportation of goods and services, etc.

While these are the three major classifications of sectors in an economy, few countries also include the sections mentioned below - 

  1. Quaternary Sector

Closely associated with the tertiary sector, the ventures under the quaternary sector include intellectual activities that are linked to technological innovations. Some of the economic activities associated with this sector include those in the fields of information technology, research, education, culture, library, etc. In India, currently, most of the individuals engaged in the organised sector can be included in the quaternary sector of the economy.

  1. Quinary Sector

This is the sector that comprises top executives and professionals involved in government jobs, universities, science, culture, healthcare, etc.

These are some of the economic activity examples undertaken by individuals employed under different sectors of a country’s economy.

What are the Characteristics of Economic Activities?

The principal characteristics of economic activities can be summarised as follows – 

  • Economic Motive – 

The primary motive of economic activities is to earn profit and consequently acquire wealth. These activities are undertaken by individuals to earn their livelihood through economic gain.

  • Resource Usage – 

Undertaking economic activities require utilisation of resources like land, labour, capital, etc.

  • Rational Usage – 

Economic activities involve maximisation of profit by allocating scarce resources rationally. This includes making optimum utilisation of land, labour, capital and every other factor involved in production.

  • Legally Binding – 

Activities that are performed for monetary gain can be termed economic activities only if they are lawful.  For instance, activities like burglary, theft, smuggling, etc. cannot be included under the purview of economic activities since they are unlawful.

  • Socially Accepted – 

Economic activities undertaken must adhere to social norms. They cannot be socially undesirable.

These are the most prominent characteristics of economic activities. You can also learn about several other types of economic as well as non economic examples by searching on the internet.

What are Non-Economic Activities?

Non-economic activities include those that are performed to render services without expectations of any monetary gain. These can include any activity that is performed in an individual’s day to day life for personal satisfaction or to fulfil expectations rooting from human sentiments.

Following are some non-economic activity examples that can simplify the concept to an extent – 

  1. Undertaking Charitable Activities

There are various non-profit organisations working towards social welfare without any monetary gains. Volunteering for such an organisation is included under the category of non-economic activities, since an individual does so from sympathising with others, without expectations of any financial benefits.

  1. Activities Undertaking During Leisure

Most people decide to pursue their hobbies or engage in activities that do not produce any monetary remuneration during their leisure time. Such activities come under the purview of non-economic activities.

  1. Religious and Cultural Activities

Visiting a temple and offering prayers, engaging in cultural activities, etc. are included under non-economic activities because they are mostly performed to fulfil one’s spiritual needs rather than monetary ones.

  1. Activities Undertaken to Fulfill Familial Commitment

If a doctor provides healthcare to his/her family members or a teacher teaches his/her own children, the activities are included under the non-economic category. This is because the professionals undertake these activities as an obligation towards their families and do not earn any monetary profit from them.

Thus, any activity that is not included under the category of economic activities and does not generate any financial gain comes under non-economic activities.

Characteristic of Non-Economic Activities – 

Such activities are characterised by the following features – 

  • Self-Satisfaction

Such ventures seldom have any ulterior motives and are undertaken solely for self-satisfaction.

  • Obligatory

Non-economic activities can also be undertaken as an obligation or compulsion to satisfy social norms, even though they do not generate any monetary profit.

  • No Financial Remuneration

The most important characteristic of any such activity is that it does not bear any financial profit for the person undertaking them. That is why these activities cannot be considered vital for an economy. These are merely for recreation or are socially binding.

Difference Between Economic and Non-Economic Activities – 

The differences between economic and non-economic activities can be illustrated in the table below – 

Parameter

Economic Activity

Non-Economic Activity

Definition 

These activities refer to those that are related to production, distribution and consumption of goods and services for economic gain.

These refer to activities that include providing services to others without any expectation of monetary gain.

Motive

Primary motive of economic activities is creation of wealth and earning financial remuneration.

Non-economic activities are usually socially binding or undertaken for psychological satisfaction.

Types 

Any activity undertaken under the five sectors of a country’s economy, namely – primary, secondary, tertiary, quaternary and quinary sectors come under the purview of economic activities.

Non-economic activity can include anything from charitable work, ventures undertaken during leisure, religious and social activities and a myriad of others.

Result

These activities are an essential part of keeping any economy running and results in creation of wealth. 

These are mostly non-essential and do not bear much significance for a country’s economy.

 

Even though non-economic activities do not bear special significance for a country’s economy, they are a vital part of everyone’s life. As a result, the amalgamation of economic and non economic is desirable for every individual’s livelihood.

You can learn more about the implications of these activities with Vedantu’s study materials and by enrolling in our live online classes. Hurry up and join today!

FAQ (Frequently Asked Questions)

What are Economic Activities?

Economic activities include those which deal with the production, manufacturing, allocation and distribution of goods and services by individuals to satisfy their financial needs. There are numerous types of activities that are undertaken in an economy which adhere to these criteria. 

For instance, businesses, professions and employment on contractual basis are all parts of economic activities that generate monetary remuneration for individuals.

What Are The Types of Economic Activities?

Economic activities can be classified into several categories depending on the sector of the economy they are included under. A country’s economy can be broadly classified into five sectors. These are the primary sector, secondary sector, tertiary sector, quaternary sector and quinary sector.