What is an Economic Structure?

A economic structure Is a set of relations of production, which guarantee the production of goods and the provision of services on which the commercial exchange of all societies is based.

By definition, an economic structure encompasses all production activities. It ranges from the agricultural and livestock sector to the commercialization of products and services, without neglecting all the processes of transformation that take place in the manufacturing industries.

Problems of the economy to flourish

These production activities are carried out with the purpose of satisfying each one the needs of the society, since they allow the flow of"articles of value"that are directly or indirectly exchanged between the productive forces.

In accordance with Karl Marx , In the concept of economic structure, the sense of organization and the type of interactions that occur among the elements that form part of it are of particular relevance.

Each element of the labor process has a particular location and function within the economic structure, which are linked by technical or social relations of production.

It is possible that internal changes occur within the elements of work, but by maintaining the relationships between them, the same economic structure will be preserved.

For example, in the case of manufacturing industry, it is possible to consider as part of the elements that represent social relations to capitalist investors and wage labor.

As part of the technical relations it is possible to point out the interaction of skilled labor with the means of work.

Existing these interactions will talk about the economic structure of the manufacturing industry despite changes in the composition of the workforce or the technological level of the means of work.

An Analysis of the Economic Structure

From the microeconomic perspective, every company makes investments that allow it to acquire assets and production rights that are made up of the economic structure of the organization.

Through them it becomes possible to transform raw materials into goods and / or services that generate profitability.

Within the assets can be differentiated fixed assets Which are characterized by not changing within the production cycle, such as infrastructure, machinery and equipment, among others. This type of asset limits production capacity.

On the other hand, current assets Are defined as the manufactured goods in the production cycle, ie the merchandise that will be used in the commercial exchange.

From a macroeconomic point of view, economic structures encourage trade between companies.

This is why it is very useful to evaluate the type of activity that each organization carries out and to include it within a sector where it is grouped with companies that have similar characteristics, and in this way, to be able to determine the economic interactions that occur between each sector.

From this perspective the economic structure would be conformed by the following sectors:

  1. Primary sector : It gathers the group of companies that are dedicated to activities related to the extraction of natural resources that serve as raw material for the manufacture of goods.

They are primary activities such as agriculture, fishing and mining.

  1. Secondary sector : Conformed by companies in which raw materials, inputs and intermediate goods, participate in processes where they are added value to produce finished products.

The processes of elaboration of these goods can be carried out manually or through the use of sophisticated machinery and equipment.

The companies belonging to the secondary sector are also known as processing companies.

This sector is made up of industrial, construction and public utilities such as electricity, water, gas and sanitation.

  1. Third sector: It encompasses the activities of providing services and commercialization of goods, such as: health, transportation, education, justice, among others.

In addition, other criteria can be used to analyze the economic structure at the macroeconomic level such as:

  • Destination of production of industries : Export sector, importer sector, sector oriented to the internal market.
  • Size of the company : Microenterprise, small, medium and large enterprise.
  • Degree of industrialization of each sector .
  • Ownership of the means of production : Capitalist, state, cooperative, peasant groupings.

Once the analysis criterion is defined, it is possible to construct indices that allow to know the contribution of each one of these groups or sectors of companies with respect to the macroeconomic indicators of a region, such as: gross domestic product (GDP), Rates of employment and inflation, capital formation and value added, among others.

Impact of the Economic Structure in a Country

Below are some macroeconomic indicators that define the potential of a country and is exemplified as the concept of economic structure affects these parameters.

Gross Domestic Product (GDP)

It is the marketing value of the totality of the goods and / or services that are produced in a nation during a certain period of time.

For example, by the year 2016 the GDP growth rate of the Mexican Republic fell by 0.3%, went from 2.6% in the 2.015 to 2.3% in the 2.016.

This drop was caused by the stagnation of the sector linked to trade and the rise in oil prices.

Employment rate

It refers to the number of people who work formally, in relation to the total number of inhabitants of productive age.

According to this definition it becomes evident that a greater technological development in the transformation processes carried out by the secondary sector can trigger problems of structural unemployment in a nation.

At the end of 2016, Mexico experienced a decrease in the unemployment rate of the economically active population of seven tenths of a percentage point.

This favorable performance was driven by the increase in private investment in manufacturing companies in the country.

Rate of inflation

It is the percentage increase in the price indexes. For the calculation of this indicator can be taken into consideration the prices of consumer goods or the deflator of gross domestic product.

According to the National Institute of Statistics and Geography of Mexico ( INEGI ) In 2.016, the accumulated annual inflation rate was 3.36%, which represents a significant increase when compared to the value obtained by this indicator at the close of the year, which was 2.13%.

The increase in this index was due to the policy of controlled release of gasoline prices, the increase of the minimum wage and the devaluation of the peso, which caused an increase of the inputs used in the industrial sector.

References

  1. Harnecker, M. (1994). The elemental concepts of historical materialism or. Coyoacán, Siglo XXI Editores S.A.
  2. [Links] Sources of funding . Madrid, Esic Editorial.
  3. Sanfuentes, A. (1997). Economy Manual . Santiago de Chile, Editorial Andrés Bello.
  4. Lizana Ibáñez. F. (2007). Analysis of the Social and Economic Performance of Costa Rica (Module 2). San José, Editorial State University at Distance.
  5. Díaz-Giménez, J. (1999). Macroeconomics: first concepts . Madrid, Editorial Antoni Bosch.
  6. Mexico Economic Structure. Recovered from: econmywatch.com
  7. Mexico Overview. Recovered from: worldbank.org
  8. Martínez, T. (2017). El Financiero: The inflation of 2016 closes at its highest level in two years. Recovered from: elfinanciero.com.mx.


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