PRODUCTION

What is production?
The act of transforming natural resources into useable goods and the provision of services that satisfy
human needs and wants OR the making of goods and the provision of services in order to satisfy
human needs and wants.

Goods: These are physical products that can be seen or touched e.g. bread, furniture, sugar, books etc.

Services: These are non – tangible activities that meet people’s needs and wants: intangible or
invisible. For example:

o Trading – buying and selling of goods.

o Teaching – imparting of knowledge to children by teachers.
o Nursing – medical care given to ill people at hospitals by health workers.
o Insurance – the industry that protects society and businesses from unforeseen risks.
o Transportation – the carrying of people, goods and services.
Give more examples of service activities in your country.

NEEDS
Definition: These are items that are essential for human beings to survive
OR
Items without which human beings will be unable to survive.
-They can be divided into material and non- material needs.
-Material needs are tangible i.e. they can be seen or touched.
-They are usually referred to as basic needs.
There are four basic/ material needs:

(a) food: that is essential for

- Providing energy.
- Building and repairing body tissues.
- Preventing diseases.

(b) Clothes: they are important for:

- Providing warmth
- Covering essential parts of the body.

(c) Shelter: for protection from:

- Harsh weather conditions e.g. cold, sun, winds etc.
- Natural enemies such as predators like lions
- For storage, warmth and privacy.
(d) Clean and safe water: that is important for:
- Excretion of waste from the body.
- Transmission of food and oxygen in the body.
- Prevention of diseases.
- Hygiene and sanitation.

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(ii) Non–material needs
-These are the services that we require for survival, they are intangible and invisible.
Examples:
-love
-security
-education
-health care
-human rights etc.

WANTS
Definition: these are items that make human lives easier and more comfortable.

- They are inessential for human survival that is man can do without them.
- Human societies only produce wants only after meeting their basic needs.
- Society has to be able to produce surplus for it to be able to have wants, for example if excess
food is produced it can be exchanged for jewellery.
Examples of wants
(i) Non – material wants
- Entertainment
- banking
- Electricity etc.
(ii) Material wants
- Jewellery
- Expensive / flashy clothes
- Mansion / very big house
- Cars
- Furniture etc.
The need for Production: In order to develop we have to satisfy our basic needs and wants to start the
process of economic growth. To satisfy our needs and wants, we produce and exchange goods.
Development emphasizes satisfaction of people’s needs and the production process ensures
that goods and services are made to satisfy basic needs first and wants later.
Development requires money for it to take place and this money is generated by production
activities such as mining, industry, agriculture etc.
Production creates wealth to fuel the development process.
The higher the level of production, the higher the level of development.

SCARCITY, CHOICE AND OPPORTUNITY COST

SCARCITY
- In order for production to occur resources have to be used.
- Resources can be in any of the following forms.
o Human resources: knowledge, expertise and skills provided by the people.
o Economic resources : capital in the form of machines and finance (money)
o Natural resources: items provided by nature that people can utilize for their own good
e.g. soil, water, vegetation, minerals etc.

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 - People’s needs and wants are unlimited (infinite). Therefore if resources were in abundance
people would produce more goods and services to satisfy their needs and wants.
- Resources are, however, limited (finite) and insufficient to satisfy all people’s needs and wants.
- The inadequacy of resources is what is called scarcity.
This means that some people in a society will be able to meet their basic needs and wants and
enjoy high standards of living while others will remain poor.
- Scarcity of resources differs from society to society since this is dependent on the level of
development ; for example :
Simple traditional societies: People mostly concerned with acquiring basic needs hence low
levels of scarcity e.g. Basarwa become satisfied once they have killed an animal for their food.
Modern societies: They have a higher level of scarcity since they have many and diverse needs
and wants which are difficult to fully satisfy. For example after a person meets the basic needs
there are so many luxuries that one desires which are usually difficult to satisfy e.g. car,
furniture, holiday etc.

CHOICE
- Given the scarcity / insufficiency of resources, people are unable to have all things they desire.
People are, therefore, forced to choose what to spend the available resources on. For example
people have to decide on whether to spend on needs or wants if their incomes are limited.
- A country or the government also has to make similar choices on how to best use the limited
resources. For example, whether to spend money on industrial development or social
development (i.e. education, health); use land for agriculture or wildlife conservation;
education or military expenditure.
- All these economic choices, made by people and the government, will affect the way in which
a country uses its resources and therefore they will determine what is produced.

OPPORTUNITY COSTS
- Whenever resources are committed to the production of one item, then the society must forego
the outputs of other items that could have been produced but have been forfeited (sacrificed)
because of the choice made.
- This means opportunity cost is the act of choosing one item over the other as a result of
scarcity of resources.
- Examples :
(i) If a student chooses to use his/ her own free time to study for an examination, he / she
sacrifices watching T.V. and other forms of entertainment. The entertainment is sacrificed
in order to study and obtain a good grade.
(ii) If a country chooses to use more money on buying weapons then other sectors are
neglected.
The importance of opportunity cost
- It helps people to make the right choices or decisions as it helps them to focus on the real /
true cost of using resources.
- For example, production may mean loss of a clean environment if it causes pollution like at
Selibe- Phikwe. So the loss of a clean environment is part of the cost of production that may
be ignored if the opportunity cost of production is neglected.

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PRODUCTION IN HUNTING AND GATHERING SOCIETIES
- Hunting and gathering societies are the earliest forms of human societies.
- They depended on products of the local environment that is the wild animals, vegetation and
water.
- They hunted wild animals, collected insects and gathered wild plants and fruits. For example
the Basarwa of the Kgalagadi desert.
- Hunter – gatherers are nomadic / wanderers, that is, they move from place to place without any
permanent homes.
Production Activities
- Gathering: done mostly by women and children. Gather water – bearing plants like the tsama
melon and makatane, nuts fruits, edible roots and tubers and morama beans.
- Hunting: done mostly by men. Hunt big and small game e.g. eland, kudu, hares, duiker etc.
Used simple weapons like bows and poisoned arrows, clubs. Also used traps, e.g. pit traps,
snares. Mostly hunted as individuals or in groups (communal hunting).
- Animal products: meat for food; skins for clothing; bones to make tools e.g. knives; animal
bladders used to make containers.
Labour
- Provided by clan members in the group.
- Division of labour according to gender i.e. men hunted while women gathered.
- Work mostly devoted to production of basic needs. No luxuries or surplus.\

Land
- Communally owned by the group.
- Had specific hunting territories.
- All resources belonged to the group.
Capital
- Owned little capital because they were unable to produce surplus.
- Possessions consisted of weapons, clothes and containers.
- Shelter was temporary because of a nomadic lifestyle.

Entrepreneurship
- Used knowledge handed down from generation to generation e.g. hunting skills; poison from
plants and animals; animal behaviour and tracking.
- Low level of production because of simple technology and dependence on basic needs.

CHANGES IN THE LIFESTYLE OF HUNTING AND GATHERING SOCIETIES IN BOTSWANA

i.e. THE BASARWA
The Basarwa are now abandoning the nomadic and hunting and gathering way of life for a more
settled life because of a number of factors;
 Provision of water by government e.g. boreholes.
 Encroachment of pastoral farming into wildlife areas.
 Overgrazing that has depleted edible plants.
 Construction of cordon fences that has disrupted migratory routes of wild animals.
 Increased population that has reduced the land available for a nomadic life.

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  Government resettlement programmes like Remote Areas Dwellers (R.A.D.)
 Increasing levels of education amongst the Basarwa.
 Anti – poaching laws that prevent Basarwa from hunting.

FACTORS OF PRODUCTION

FACTORS OF PRODUCTION

LAND LABOUR CAPITAL

ENTERPRISE/ENTREPRENEURSHIP
Organizes the above
three factors to produce a product.

- There are four factors of production namely, Land, Labour, Capital and Enterprise/
Entrepreneurship.
- Each of the factors has to be present if production is to take place.

(1) LAND
Definition: This is the whole earth surface and the natural resources on it e.g. soil, minerals, water,
wildlife, vegetation etc.
OWNERSHIP OF LAND
- Land or natural resources are owned or controlled in some way.
- Ownership and control of land resources is paramount in production because it determines who
produces and becomes wealthy.
- Landowners are usually rich while the landless are poor.

Types of land ownership

(a) Public / State ownership
- The land belongs to the government
- Private ownership and selling or buying of land is prohibited.
- It can be leased out to individuals or companies for specific periods of time.
- In communist countries like China, the land used to be all owned by the state, and individuals
had the right to use it.
- In other countries, parts of the land are owned by the government in countries like Botswana
and South Africa e.g. National Parks and Game Reserves, Mining concessions.
(b) Communal ownership
- Land belongs to the whole community, usually the tribe / ethnic group.
- Everyone in society has access to land.
- The chief has the power to share out the land to individuals. In Botswana it is the
responsibility of the Land Boards.
- Grazing lands are communally used.

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Advantages
- Everyone in society has access to land.
- The land is free.
- Land is allocated fairly because no one is allowed to grab land.
Disadvantages
- Land degradation may occur as no one takes responsibility for looking after it e.g.
deforestation, soil erosion.
- Having title deeds is prohibited.
- The user is unable to use it as collateral to obtain loans.
- Women are denied ownership of land in some traditional societies.

(c) Collective Ownership

- This is when land is owned and worked by the community as a unit.
- They combine their capital and labour and share the profits equally.
- Found mostly in Socialist or Communist countries e.g. Russia and Ujamaa villages in Tanzania
in the 1970’s.

(d) Private Ownership (Freehold)

- This is when land is owned and controlled by individuals or companies.
- There land has title deeds or certificate of ownership.
- Land is a commodity that can be bought or sold i.e. land has value attached to it.
- Land is productively used e.g. commercial farming, mining etc.
- Common in Capitalist economies.

Advantages
- Land can be used as a security to obtain loans.
- Can be sold to raise capital.
- Land carefully looked after by the owner.
- Anybody can buy land as long as he / she has the money.

Disadvantages
- Only the rich can own land.
- Landlessness and poverty among the poor.
- May lead to land speculation i.e. People buying up large tracts of land in order to sell it for a
profit in future.

(e) Leasehold
- This is when land owners rent out their land to tenants for a fee.
- Tenants use the land for commercial production.
- The landowners are referred to as absentee landlords.

Advantages
- Land used productively because the tenant has to pay rentals.

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Disadvantages
- Rent has to be paid whether there has been production or not.
- The tenant is unable to use it to raise capital.
- The tenant can misuse land.

LANDLESSNESS
- People are said to be landless when they are unable to have access to the land at all.
- Landless people are unable to produce or fend for themselves leading to poverty.
- Landlessness is caused by
(i) People being too poor to buy their own land.
(ii) Inadequate /limited land for existing population.
(iii) Unfair distribution of land.
(iv) Rapid population growth.

(2)LABOUR

Definition: It is human effort that is directed at the production of goods and services (i.e. both physical
and mental).

- Man is central to production because it is he who initiates production and is also the consumer.

SPECIALISATION OF LABOUR

-This is the concentration of people on one job that they are trained in e.g. teaching, engineering and
nursing.
-It can be divided into three levels i.e. individual, regional and national specialization.

(a). Individual Specialization:

-This is when a person concentrates in one activity only e.g. a teacher can deal with one subject only
like a DVS teacher; a doctor may specialize on teeth problems (dentist).

(b). Regional Specialization:

-This is whereby people in an area are engaged in the production of a particular commodity or service
due to geographical conditions, specific skills, or resource availability e.g. copper nickel in Selebi –
Phikwe, Basketry in the North West, Phane picking in the Central District etc.
(c). National Specialization:
-Different countries specialize in producing certain commodities which they have comparative
advantage in e.g Botswana specializes in Beef and diamonds because of physical conditions, Lesotho
specializes in wool, Malawi – fish, Zambia – copper etc.

(i)Traditional societies
-Specialization of labour was according to gender i.e. men hunted while women gathered.

(ii) Modern societies

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 - There is specialization of labour. People concentrate on one job that they are trained in e.g.
teaching, engineering and nursing.
- Specialization has led to the efficiency of labour (i.e. high productivity of labour) because
people become very good at what they do.
- People no longer have to do everything for themselves.
- For example :
 Farmers produce food for the whole society.
 Factory workers produce manufactured goods.
 Health workers provide health services.
 Teachers provide education.
 Construction workers provide shelter etc.
- People have to pay for the goods and services produced by the other sectors or specialists.
- This means that the process of specialization and exchange links the modern economy.

- DIVISION OF LABOUR

Definition: This is the breakdown of the production process into small parts so that each worker
concentrates on a single task.
(i) Traditional societies :
- Division of labour was divided in a simple way i.e. according to gender.
- Men hunted, looked after cattle, cleared and ploughed the land.
- Women gathered, collected, grew crops and harvested, reared children and performed domestic
chores.

(ii) Modern societies

- Division of labour is more complex in modern societies.
- Each worker contributes a small part to the whole production process. The process is broken
down into simple tasks.
- For example: At B.M.C. factory the production process is broken down into the following
simple tasks ; slaughtering, skinning, opening and removal of intestines, meat inspection,
cutting, deboning and packing. Each worker concentrates on a task all day.

Advantages of Division of Labour/Specialization

- Increases workers’ proficiency because of constant repetition.
- Saves time because there is concentration on one task or little movement from one job to
another.
- Workers are easily trained for a single task.
- Creates a lot of employment opportunities e.g. teaching
- Makes it possible for greater use of machinery.
- Higher productivity.
- Work becomes lighter.

Disadvantages of Division of Labour/ Specialization

- Doing the same job repeatedly leads to boredom.

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 - Workers lose the initiative to exercise judgement and responsibility.
- Increased risk of unemployment because of the greater use of machinery.
- Loss of craftsmanship because of the increased use of machinery.
- Increased dependency easily leads to disruption of production e.g. if one worker is missing.
- Concentration on one task makes it difficult for one to acquire other skills.

TYPES OF LABOUR

(a) Specialized Labour

- These are people who are experts or highly skilled at work.
- They have high education levels.
- They have spent long time training.
- They are paid high wage and salaries.
- Also known as professionals e.g. engineers, doctors, teachers, nurses, lawyers, etc.

(b) Skilled labour

- These are people who are highly trained in practical work related to production i.e. artisans.
- They know how to design and make items.
- They are highly trained and paid.
- Examples: surveyors, electricians, auto mechanics, fitters and turners etc.
- They are trained at polytechnics and in industries.
- They are given technical qualifications e.g. City Guilds and Crafts, Higher National Diplomas
etc.

(c) Semi – skilled Labour

- These are people who are trained on-the-job for specific tasks.
- Mostly found in industry.
- They usually have no paper qualifications but gain enough experience to perform the job
proficiently.
- For example a spanner boy who eventually becomes a fully – fledged mechanic.

(d) Unskilled Labour

- These are workers who have no training at all.
- Mostly used as manual labourers e.g. farm workers, cleaners, garden boys etc.
- They are paid low wages that is the minimum wage.

CONDITIONS THAT PROMOTE THE EFFICIENCY OF LABOUR

Efficiency of labour: The ability of workers to be highly productive.

The conditions that promote efficiency of labour are:

 Education and training: The higher the level of training and education the higher the level of
productivity.
 Customs and attitudes of the people: Some cultures encourage hard work e.g. Japanese and
Chinese cultures.

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  Technology: If workers use simple technology then productivity will be lower. Workers who
use advanced technology will be more productive.
 Working conditions: Good working conditions ensure high productivity e.g good ventilation,
lighting, safety, working hours, décor etc.
 Workers welfare: Workers must have peace of mind for them to be productive at work. This
can be aided by giving workers medical aid, pension schemes, funeral assistance, social and
entertainment facilities, housing etc.
 Motivation: Workers can be encouraged to work harder by being offered incentives such as
higher wages, bonuses, participation in decision making etc.

HOW CONDITIONS IN BOTSWANA FACILITATE THE EFFICIENCY OF LABOUR

- Education: There is free education for all to improve knowledge.

- Training: at University and other tertiary institutions to improve the skills.
- Labour laws: that protects the workers from exploitation e.g. minimum wage, working hours
etc.
- Pension schemes / social security: for both government and private sector workers.
- The acquisition of modern technology: such as complex machines, computers etc. that help to
raise productivity.
- Improvement of infrastructure: to improve the movement of goods and provision of services.
- Better housing for workers e.g institutional housing, like teachers houses, B.H.C. houses and
SHHA Programme.
- Provision of health facilities: such as clinics, health posts, hospitals etc. for a healthy and
productive population.
- Access to resources such as energy sources etc.

CONDITIONS THAT MILITATE AGAINST THE EFFICIENCY OF LABOUR IN BOTSWANA

- Lack of skills: most of the people are unskilled without formal training..
- Poor health : mainly because of A.I.D.S that makes workers weak and unproductive.
- Poor infrastructure : e.g. narrow roads that make traffic move slowly ; single rail ; poor
telephone coverage.
- Poor education : The education system produces people that are unprepared to join the job
market.
- Poor work ethics : such as late coming, lack of discipline, absenteeism, misuse of telephones
etc.
- Poor / low level of technology : most of the work in Botswana is done manually and slowly
e.g. agriculture, construction, etc.
- Poor working condition : such as low wages, long working hours, poor safety, and
unavailability of pension schemes for some private sector employees etc.
- Culture : works against the efficiency of labour in the following ways :
The extended family that places a huge burden on the worker making them less focused
at work.
Lack of assertiveness e.g. going the extra mile.

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(3) CAPITAL

- A man – made resource

Definition : It is the money, machinery technology and buildings that are used to produce goods.

Capital is in two forms :

-Money capital
-Capital goods (i.e. Machinery / technology)
(a) Money capital
- Also known as finance.
- This is the money that is used to increase production, that is, it is used in ways that will help to
earn more money.
- It can be used in the following ways :
Buying capital goods that will increase production hence earn more money.
Investment : saving it in a bank so that one can earn interest.

(b) Capital Goods

- These are tools, equipment or machinery that are used to make other goods e.g. factory
machines, roads, buildings, vehicles etc.
- Also known as fixed capital because they remain unchanged during production.
Ways of raising capital
Capital for investment can be raised in the following ways:
Saving: abstaining from consumption and putting the money in the bank to earn interest.
Borrowing: from banks and financial institutions.
International loans: from other countries, the World Bank etc.
Investment: putting money into a business with the hope of earning profit.
Shares: putting money in the business to get a certain percentage of profits made.
Taxation: by the government. It taxes workers and companies to raise money for development.

ENTREPRENEURSHIP

-It refers to the art or skill of coordinating, managing, organizing and running a business.

What is an entrepreneur?
An entrepreneur is a person who takes the risk of putting down money to start a business with the main
aim of making a profit.

Role played by an entrepreneur

 Organization : of land, labour and capital to produce goods and services.
 Decision – making: on what produce; how to produce and where to produce.
 Management/Leadership: the day to day running of the business / enterprise.
 Risk -bearer: the ability to take risks and steer the business to be a success.

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Enterprise: The process of bringing together the factors of production to come up with goods and
services.

N.B. Successful entrepreneurs are very scarce (few) in most societies.

TECHNOLOGY

- Technology is the combination of tools, skills and machinery a society employs to produce
goods and services.
- Technology is dynamic, that is, it is always changing.
- For example :
- Primitive societies: such as hunter – gatherers used simple tools made from bones and wood.
Production was very low.
- Agricultural societies: used better tools made from iron e.g. hoes, axes, spears etc.
- Modern societies: use complex technology such as machines, computers, motor vehicles etc.
Production is very high.

.
TYPES OF TECHNOLOGY
There are three types: Simple, Intermediate and complex.

(a) Simple Technology

- The use of hand tools to produce goods e.g. hoes for weeding, knives for cutting etc.
- It demands a lot of manual labour.
- Mostly used by traditional societies e.g. subsistence farmers.

Advantages
- Cheap to buy and use.
- Uses unskilled labour.
- Tools can be made at home.
- Creates a lot of employment opportunities.

Disadvantages
- Very slow method of production.
- Poor quality goods are produced
- Low productivity.
- Strenuous i.e. Tiresome and back – breaking work.

(b) Intermediate technology

- This is the use of simple machines to produce goods and services.
- For example.
o Sewing machines
o Animal drawn ploughs and carts.
o Windmill water pumps
o Cement blocks machines etc.
- Can be used both at home and in industry.

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 - Can be used by both semi – skilled and unskilled labour.

Advantages
- Relatively faster means of production than simple technology
- Cheaper
- Easy to use and maintain
- Produces good quality goods
- Creates employment because it is labour intensive.

Disadvantages
- Strenuous to use because it needs a lot of human effort.
- Low productivity
- Slow method of production as compared to complex technology
- Produces lower quantities of goods

(c) Complex Technology

- This is the use of big and sophisticated machines for production.
- Machines are power driven e.g. electricity, fuel etc.
- Some of the machines are automatic.
- Examples : Automatic Teller Machines, factory machines, computers, telephones etc
- It requires education and training.
Advantages
- Creates employment in factories
- High quality goods produced
- Very fast and efficient
- Mass production of goods
- Cheaper / affordable goods

Disadvantages
- Expensive to buy and maintain.
- Have to import spares at great costs.
- Increases dependency on Developed countries.
- Cause damage to the environment e.g. pollution.
- Can lead to unemployment because of the use of automatic machines.

APPROPRIATE TECHNOLOGY
Definition: Tools and machines that are best suited for particular conditions in society.
- It depends on the level of development of the society.
- For example a subsistence farmer will use ox – drawn ploughs, carts, hoes etc. because he can
afford and maintain them than complex machinery.
- In developed countries a tractor is appropriate for the farmers because they have the capital,
big farms and the skills to make and maintain them.

Factors that determine appropriate technology

(i) Level of development : developed societies tend to concentrate on complex technology
while underdeveloped societies concentrate on simple and intermediate technology.

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 (ii) Education and skills : complex technology needs highly educated and skilled people to
operate and maintain while simple and intermediate technology need less skills and
education.
(iii) Capital/Affordability : complex technology is expensive to buy and maintain therefore only
the rich countries can afford it. L.D.C s are poor hence can only afford to use simple and
intermediate technology.
(iv) Employment creation : developing countries like Botswana have high unemployment levels
hence need simple and intermediate technology that are labour intensive. Complex
technology would be inappropriate as it would lead to high rates of unemployment.

Advantages of Appropriate Technology

- Creates employment
- Makes use of local resources
- Cheap to buy and maintain
- Produces relevant goods and services
- Promotes local development.

Development of Appropriate Technology in Botswana

Botswana is one of the developing countries that recognize and appreciates the importance of the use
of appropriate technology for development this is indicated by efforts undertaken by the Botswana
Technology Centre (BOTEC), Rural Industries Promotion Company and Rural Industries Innovation
Centre ( RIIC). The primary aim of these organizations is to assist the people of Botswana to identify
appropriate technology choices for development. They create and promote technologies that are best
suited or appropriate to conditions particularly to rural areas in Botswana.

The following are examples of the technologies invented and adapted by BOTEC and RIIC in their
effort to encourage appropriate technologies in Botswana.

Solar Cooker/ Bakers : The solar cookers are developed by RIIC and they operate by
converting the sun’s energy into electricity. This technology is appropriate to Botswana
because Botswana has a plentiful supply of the sun and therefore the technology is cheap., easy
to use and repair. It also assists Batswana to reduce dependence on the already disappearing
firewood which leads to deforestation and other environmental impacts like soil erosion and
land degradation.
Rural electrification: Photovoltaic Power Station at Motshegaletau Power Station is another
example of how the sun can be used to generate electricity that is cheaper and affordable by the
rural people in Botswana. It uses solar panels to convert sunshine into electricity.
Solar Aid : BOTEC has invented a solar aid for the hearing impaired people. It combines solar
and hearing aid technologies to make solar rechargeable hearing aid
that never needs replacement batteries.
Water tanks: RIIC has designed water tanks which are used for rain harvesting. This is an
appropriate technology for the drought prone Botswana with unreliable rainfall
Animal Drawn Plough: RIIC has also designed animal drawn pumps that do not require fuel
in order to run. They are suitable for rural areas with a problem of water and are cheaper and
easier to use.

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 Farming Implements: RIIC has developed farming implements such as ploughs and planters
that are simple, cheap and easy to use and are thus appropriate for local subsistence farmers
who lack capital and modern skills.
Other examples include technologies such as the Basic windmill developed by RIIC to pump
water and generate electricity. Sorghum Dehuller for grinding and threshing grain and the rim
oven. The rim oven is another invention by RIIC made from two truck rims welded together. It
stands on three legs and has a hinged steel door. It uses firewood and can bake a batch of nine
loaves in an hour. It is appropriate for rural dwellers.

All the above appropriate technologies indicate to us that Botswana is making efforts in trying to
encourage Batswana to use appropriate technology for development. We should then commend the
departments such as RIIC and BOTEC for these good efforts because Batswana have less money and
skills to use the expensive and complicated technologies.

METHODS OF PRODUCTION

(a) Labour Intensive Production

- It relies heavily on the use of simple technology and manual labour.
- Mainly uses unskilled labour.
- Examples are : cutting grass using slashers ; transporting sand with wheelbarrows ; digging
trenches with picks and shovels.

Advantages
- Little capital needed
- Low labour costs
- Creates a lot of employment opportunities
- It is environmentally friendly i.e. destruction and pollution of the environment is very limited.
Disadvantages
- Poor quality work / products.
- Slow method of production
- Low levels of production
- Makes people tired because the work is strenuous.

(b) Capital Intensive Production

- The use of advanced or complex machines to speed up production.

- For example : using a mechanical digger to dig a trench, vehicles to transport goods etc.
- Needs trained or skilled people to operate and maintain the technology.

Advantages
- Efficient and fast method of production.
- Mass production of goods that makes them cheaper.
- High quality goods produced.
- Work becomes lighter and more enjoyable because of the use of machines.
- Creates a lot of skilled manpower.

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 - Improves the country’s infrastructure and technological base.

Disadvantages
- Expensive to buy and maintain
- High labour costs since it employs a lot of skilled and semi – skilled manpower.
- Large scale unemployment because most of the work is done by machines.
- Causes environmental damage e.g. pollution, deforestation etc.

STAGES / SECTORS OF PRODUCTION

There are basically three stages of production:

(a) Primary Production

- This involves the extraction of natural resources directly from the earth’s surface.
- The physical appearance of the products remain unchanged during the production process.
- Examples :
o Mining – the extraction of minerals from the ground / earth.
o Fishing – catching fish in water.
o Forestry – the growing and cutting down of trees for timber.
o Agriculture – production of crops and livestock.
- The products of primary production are :
o They are raw, that is, they are in their natural state.
o Generally unusable directly by the people since they need some processing.

(b) Secondary Production

- It involves the transformation of raw materials into semi – finished and finished products.
- There are three types of secondary production:
(i) Processing : The transformation of raw materials into more useable goods.
For example : Cattle into beef (BMC Abattoir) ; hides into leather (BMC Tanner) ; Maize
into mealie meal (Sefalana) ; Copper ore into copper metal (BCL)
(ii) Manufacturing : It involves the transformation of raw materials into more specific and
useable goods. These goods can be used directly by the consumers / public.
For example : Leather into shoes, belts, jackets, hats etc. ; cloth into clothes ; steel into door
frames, tools, carts, etc. chocolates from milk, cocoa and sugar ; etc.
(iii) Construction : The building of houses, dams, roads, bridges etc. Construction uses both the
products of primary and manufacturing industries.
For example : To come up with a complete building the following items are used :
o Quarry stones, river sand, pit sand and cement from mining.
o Timber for roofing from forestry.
o Nails, window and door frames, plumbing materials, plate glass, electrical components
etc from manufacturing industries.

(c) Tertiary Production

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 - It involves the provision of services that help in the transfer of finished products from the
factory to the consumer.
- It is now the major employer in most of the modern economies.
- There are two types of services involved :
(i) Commercial services :
o Warehousing – storing of goods in bulk in large buildings.
o Wholesaling – the selling of goods in bulk to the shops and supermarkets.
o Retailing – the selling of goods directly to the public through shops, supermarkets etc.
o Transportation – carrying of goods and people using vehicles e.g. cars, trains,
aeroplanes, ships etc.
o Advertising.
o Insurance services.
o Banking and finance.

(ii) Direct services :

- Mainly aims at serving the people directly. For example :
o Health services
o Education and training
o Entertainment e.g. music, sports, cinema etc.
o Lawyers / legal services.
o Architects / architecture.
o Security e.g. police, security firms etc.

ECONOMIC SYSTEMS FOR ORGANISING PRODUCTION IN SOCIETIES

There are basically three economic systems, namely:

o Capitalism / market economy
o Socialism / planned economy
o Mixed economy
An economic system determines the following in a society:
 Who owns the means of production i.e. land, labour and capital.
 Who controls production i.e. what and how much to produce.
 Who benefits from production?

(1) Capitalist / Market economy

Definition: This is an economic system whereby the means of production are owned and
controlled by individuals or the private sector.
The main emphasis is on private ownership of capital or property.

Examples:
 Africa : Kenya, Nigeria, South Africa,, Malawi etc.
 Others : USA, Japan, Germany etc.

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Main features / characteristics
- Private property : Individuals have the right to own and control the means of production i.e.
land, labour and capital.
- Freedom of choice: People are free to choose what to produce, how to produce and where to
produce.
- Freedom of enterprise: People are free to start businesses of their choice.
- Self interest : People are motivated by the need to make profits for themselves.
- Competition : Businesses compete against each other.
- Price mechanism : The laws of supply and demand determine the prices for goods and services.
- Government role: There is minimal government interference with the running of the economy.

Advantages
- The economy responds quickly to the people’s needs and wants quickly.
- Entrepreneurs always try to use the resources as efficiently as possible in order to get the most
profits out of them.
- High quality goods and services because of fierce competition.
- Entrepreneurs are always motivated to make a success of their businesses because they want to
make a profit.
- Highly productive because of the use of mass production methods.
- Capitalist countries have achieved the highest levels of development in the world e.g. U.S.A.,
Japan etc.
- Anyone has the chance to become rich provided he / she has the business skills.

Disadvantages
- It is unable to meet the basic needs of the people since the emphasis is only on profit.
- Businesses overcharge since there is little government control.
- Damage to the environment goes unchecked in the pursuit of profits e.g. deforestation,
pollution etc.
- Inequalities in society widen with the rich becoming very rich and the poor very poor.
- Workers are exploited by the employers e.g. low wages, long working hours, violation of
labour rights.
- Uncontrolled competition may lead to overproduction and lowering of prices thus leading to
collapse of economies e.g. The Economic depression of 1929 in America that even affected
Europe and the rest of the world.

(2) Socialist / Planned economy

Definition: It is an economic system whereby the means of production are owned and
controlled by the state for the benefit of the whole society.
- Private ownership of property is prohibited.
- The government controls all production, distribution and consumption.

Examples :
 Africa : Mozambique, Angola, Ethiopia and Tanzania
 Others : China, Cuba, North Korea, Vietnam

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Main features / Characteristics
- State ownership : All means of production belong to the state.
- State entrepreneurship : The government is the only entrepreneur that is allowed to operate.
- Collective interest : All people are expected to work for the good of the society.
- No competition: There is no competition since all businesses belong to the state.
- Price control : All prices are set and controlled by the state.
- Central planning : Decisions on what and how to produce are made by the central government.

Advantages
- It satisfies all the people’s basic needs i.e. food, shelter, clothes etc.
- Benefits of production are distributed equally among the whole population.
- Everyone has the right to work / employment.
- Goods and services are made available at low prices.

Disadvantages
- Difficult to plan for a whole country and these results in a lot of mistakes.
- It suppresses individual freedom to think and act.
- State appointed managers are inefficient because they are appointees rather than entrepreneurs.
- Technologically inefficient because managers are prohibited coming up with new ideas or
making changes.
- Very few luxury goods are produced hence the people’s lives are uncomfortable.
- A very limited choice for consumers since all goods and services are produced by the state.
- Low productivity levels because of over – employment, inefficient management and low
morale of the workers.
- N.B. However most of the socialist are moving towards the Capitalist mode of production.

(3) Mixed economy

Definition : It is an economic system whereby there is both private and state ownership of the
means of production.

- It is a mixture of both capitalism and socialism.

- There is a state planning, control and businesses operating alongside a private sector.
- Most countries of the world are now mixed economies.
- Examples : Botswana, Zimbabwe, Zambia etc.
Main features / Characteristics
- There is private and state / public ownership of resources.
- There is freedom of enterprise.
- The government also operates enterprises e.g. state corporations / parastatals.
- The government plans for the economy e.g. the National Development Plans .
- The government interferes in the running of the economy through the following ways
 Taxation of businesses.
 Legislation e.g. company laws, labour laws.
 Quality control e.g. through the Botswana Bureau of Standards.
 Price monitoring.
 Provision of basic infrastructure e.g. roads, power, railways, water etc.

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 - Government provides social services for the people such as education, health, sanitation, social
welfare etc.

Advantages
- It redistributes the benefits of production through the taxing of businesses.
- Helps the poor through the welfare system.
- The government provides the basic needs of the people.
- The government protects the workers from exploitation.
- Consumers obtain quality goods and services.
- The environment is protected from unnecessary damage by laws.
- People are free to establish enterprises of their choice.

Disadvantages
- The government may discourage investment through tough laws and heavy taxation.
- Government always ends up in debt because of public expenditure.
- The welfare system encourages people to be lazy and irresponsible.
- State enterprises are inefficient and a drain to the economy.

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