- Primary-led development
- Primary-led development is a strategy in which a country expands its farming, fishing, forestry or mining to raise output and earn foreign currency from exports.
- Primary product dependency
- Primary product dependency is when a country relies on exports of one or a few raw materials, such as crops or minerals, for most of its foreign currency.
Three ideas for weighing primary industries
Can you name the three ideas an answer on primary industries and development has to weigh?
One is the case for specialising; two explain the risks.
A country has a comparative advantage in a good when its opportunity cost of producing it, in other goods given up, is lower than another country's.
Can you think of an example?
Workers Zambia puts into copper mining cannot grow food crops. With rich mines, it gives up few crops for each tonne of copper.
Demand is price inelastic when the quantity bought changes by a smaller percentage than the price that caused it.
Can you think of an example?
Coffee drinkers buy much the same amount after a frost sends the price soaring, so a poor harvest raises the price far more than it cuts sales.
Diversification is spreading a country's output and exports across more products and sectors, so a fall in one price does less harm.
Can you think of an example?
A copper exporter that also builds up farming, energy and tourism earns foreign currency from several sources, so a copper slump hits a smaller share of its income.