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Economics Macroeconomics > Topic 4: Basic Economic Problem, Business Cycles And Publish Sector Economic Structure > Flashcards

Topic 4: Basic Economic Problem, Business Cycles And Publish Sector Economic Structure Flashcards

1
Q

The primary sector

A

Primary sector has provided people with food and raw materials since ancient times

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2
Q

Composition of the primary sector

A

The primary sector consists of all economic activities that are a first step in the production process which usually involves harvesting of natural resources and minerals

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3
Q

Elements of the primary sector

A

Agriculture, forestry and fishing are elements that take place on the earths surface while mining and quarrying take place below the earths surface

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4
Q

The primary sector

Agriculture (major components)

A

Agriculture includes three major components
Field crops such as maize, wheat, sorghum, sugar cane and groundnuts
Horticulture like grapes, fruit and vegetables
Animal products including wool, meat and dairy products

Only 13% of SAs land surface is suitable for cultivation and the average rainfall I low and varied

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5
Q

The primary sector

Forestry

A

Forests are an Indispensable part of a country’s heritage. South Africa has about 1100 indigenous tree species
Commercial plantations of exotic species proves to be a sound investment and the private sector has established large plantations of pine, eucalyptus and wattle trees. South Africa’s forests produce mainly pulp for paper and board as well as timber poles and planks
A large portion about 28% of our forests belong to state owned South African Forestry Company Limited.
Progress has been made in improving the management of indigenous forests with the active involvement of local communities
The industry negotiated and accepted a sector charter based on DTI code

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6
Q

The primary sector

Fisheries

A

South Africa’s fishing industry is small
It’s coastline covers about 3000 km. the department of Agriculture, forestry and fisheries is the central government agency primarily responsible for marine fisheries. Inland fisheries fall under jurisdiction of the provincial departments
Commercial fishing excludes subsistence fishers because limited commercial fishing rights were introduced to allow for the development of small fishing businesses in disadvantaged coastal areas
The fisheries sector is included in the Agriculture- BBBEE code that was in process of being finalised in 2011

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7
Q

The primary sector

Mining

A

Mining in SA is a strong industry because we have a bigger variety and more reserves if metal than most other countries of the world
Minerals can be divided into four main groups, precious metal and stones (gold and diamonds)
Energy minerals( gas, coal and uranium)
Metallic minerals (copper and iron)
Non metallic minerals( asbestos and salt)
South Africa has the following proportions of worlds reserves: magnesium 80%, chrome 72%, platinum group of metals 88% , gold 40%, and aluminium 37%

In South Africa mining is a a private sector industry it requires large amounts of capital investment and is extremely risky because the returns in investments are only realised after a number of years. In all countries mining is the subject to all sorts of government policies. Foreign mining investors are shying away from South Africa because they are uncomfortable with some government policies South Africa is ranked number 67 out of the 79 countries

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8
Q

The primary sector
Importance of primary sector
What does the primary sector contribute to?

A 
Contributes to GDP
Contributes to employment 
Contribution to economic growth
Contribution to exports
Backward and forward linkages
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9
Q

The primary sector

Contribution to GDP

A

The primary sector had a very important function because it provides food to the domestic population and contributes greatly to employment and to export earnings
Subsistence agriculture provides a livelihood for a large number of households.

It is essential that small scale miners in SA become integrated into the greater South African mining community and that the sector becomes incorporated into mainstream economy

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10
Q

What does the primary sector have the potential to do?

A

It has the potential to employ many more workers. The NGP identifies five growth areas

Infrastructure 
Agriculture and agriprocessing
Mining and mineral beneficiation 
Manufacturing 
Tourism

Minimum wages were introduced in the agricultural sector with effect from March 2003

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11
Q

The primary sector

Contribution to exports

A

The composition of our exports suggests that SA is still significant extent, a developing country because our primary sector still contributes more than one-third of our exports

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12
Q

Backward and forward linkages

A 
linkages refer to the forward or backward connections between industries at different stages  of production 
The stages are
1. Farming angora goats
2. Shearing and baling the hair
3. Spinning the hair
4. Weaving the fabric
5. Sewing apparel
6. Selling wholesale
7. Transport
8. Retail
longer chains of production afford more opportunities to add value and employ more people
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13
Q

Backward and forward linkages pt 2

A

On the other hand, his sector passes on products (forward linkages) down the production chain that is used as raw material or intermediate goods to which more value is added

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14
Q

What eliminate the opportunities to add more value and employ mre labour

A

exports take commodities and products out of the processing chain too early
This is the case in mining where raw materials are exported and eventually the goods made from raw material are imported at high costs
To cure this, the government focuses in its NGP on beneficiation which means to ad value by adding capital and labour before exporting takes place

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15
Q

The primary sector
Discrimination and exclusion
What was the main reason for the discriminatory policies and wars?

A

South Africas colonial past

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16
Q

The primary sector
Discrimination and exclusion
(Agriculture)

A

The land act of 1913 forbade the sale of land outside the reserves to black people. In effect, this act confines nearly 70% of the SA population to owning no more than 14% of the land area
Black farmers in their homelands were excluded from the generous financial support that white farmers enjoyed from the government at its peak in the 60s, state assistance to white and black farming was at a ratio of
197;1

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17
Q

The primary sector
Discrimination and excluion
(Agriculture) pt 2
Land distribution programme

A

The government instituted the Land Redistribution Programme to provide previously disadvantaged South Africans with access to agricultural land. The government originally aimed to redistribute 30% SAs agricultural land by 2014.

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18
Q

The primary sector
Discrimination and exclusion
(Mining)

A

mining in SA was financed by foreign capital, after 1948, black people were not allowed to engage in mining as owners. Even in homelands most of the mining was in the hands of white-owned businesses. By 2002 the mining industry provided more than a quarter of all income earned by black workers in SA

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19
Q

The primary sector
Discrimination and exclusion
(Mining) pt 2
The minerals and petroleum resources development bill

A

The minerals and petroleum resources development bill passed in June 2002 is intended to accelerate redress in the mining industry. with this bill, the government effectively nationalized all mineral rights. Any person who wants to engage in mining has to get a license from the government
The government can also require that previously disadvantaged South Africans share in the benefits of new mines developed under new order mining licenses

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20
Q

What is the tertiary sector

A

produces services. Services themselves are intangible. They are not solid and you cannot touch them.

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21
Q

Composition of the tertiary sector

four major groups of industries

A
  1. Wholesale and retail trade, catering, and accommodation
  2. Transport, storage, and communication
  3. Finance, insurance, real estate, and business services
  4. Community, social, personal, and other services
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22
Q

Composition of the tertiary sector

Wholesale and retail trade and accommodation

A

Wholesale is becoming less important because man producers prefer to supply directly to retailers
like catering by restaurants

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23
Q

Composition of the tertiary sector

Transport, storage, and communication

A

services such as transport and communications related to the uses of our infrastructure like purchasing a ticket to the train station

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24
Q

Composition of the tertiary sector

Finance, insurance, real estate, and business services

A

finance consists of banking services and business services include services such as auditors, architects, and economics. Insurance refers to covering risks relating to goods and events. Assurance or life assurance refers to covering risks relating to people’s lives

25
Q

Composition of the tertiary sector

Community, social, personal and other services

A

Community services include protection like the police, defence and security services), sanitation and water
Social services include medical, education and entertainment services
Personal services include dry- cleaning, repairs and hairdressing
Most community services are provided by the public sector

26
Q

Importance of tertiary sector

Contribution to GDP

A

Many essential services are not included such as services of the home makers and services rendered be businesses for themselves in the primary and secondary sectors

27
Q

The tertiary sector
Importance of GDP
(Contribution to employment)

A

The tertiary sector was the biggest sector in terms of employment

28
Q

Importance of tertiary sector

Contribution to Economic growth

A

The tertiary sector was the engine of growth that pulled the other sectors

29
Q

Importance of tertiary sector

Contribution to exports

A

Countries export services when they sell services such as insurance and port facilities, to foreigners. Countries also import services

30
Q

Discrimination and exclusion

A

Prior to 1994, the general rule that black people might not own or occupy property in any area other than that specification set aside for the group, put businesses and professional opportunities out of their reach. Even in urban townships, individuals and businesses were limited in what was allowed
The introduction. Of bill of rights not only removed all discrimination in respect of property rights, choice of occupation and labour practices, but created opportunities to redress past wrongs by means of land reform, employment equity and affirmation action
Women also gained

31
Q

South Africa’s infrastructure

A

Infrastructure refers to a country’s social capital things that are used by all like housing, hi hospitals, schools, water supply, roads, railways, ports, and airports
The maintenance expansion and modification of infrastructure are essential for economic growth and development. In fact it is precondition for a high rate of economic growth. It is the only legal manner available to a government to subsidise and thereby utilise the world market to create employment and reduce poverty

32
Q

South Africa’s infrastructure
(Communication)
Why is it important to have communication?

A

A communication infrastructure is inportant because people have to

  1. Monitor prices
  2. Inform and be informed
  3. Compare and assess domestic and foreign economic conditions
  4. Follow financial changes like interest
  5. Check the availability of raw materials and services
33
Q

South Africa’s infrastructure
(Telephones)
How do telephones operate ?

A

Telephones operate with either cable connections like fixed line or landline telephone, signal connections or satellite connections. SAs total number of connections exceeded 51 million in 2009

34
Q

South Africa’s infrastructure
(Telephones)
Different types of telephones

A

Fixed line telephones
1. Telkom SA, a public sector enterprises the only fixed line operator in SA until 2006, Neotel obtained a permit to offer a similar service using existing networks that belonged to eskom and transnet
A fixed line telephone system provides for emails, facsimile fax services, internet like buying and selling over the internet is called e-commerce
These items are essential for globalisation

Mobile telephones
1. Cellular telephones, phones that operate on airwave signals. Communications can be set up anywhere when travelling or where signals avail able

  1. Satellite telephones. Also known as sat phones, this type of mobile phone connects to orbiting satellites instead of signal towers. They provide similar functionality to cellular telephones: voice calls, short messaging services and Internet access. Coverage may include the entire earth or only specific regions. The mobile device, known as terminal can vary
  2. Radio telephones. A two way radio system is arranged for speaking and listening as a mobile station. The system operates from a signal sender and receiver in a specific wave spectrum. It is used in ships and aircrafts by the military and by some business
35
Q

South Africa’s infrastructure

Postal services

A

Mail by air or land is the most common and basic means by which messages can be communicated and goods delivered. The speed at which globalisation takes place depends on a fast and reliable communication system. The South African post office of which government is the sole shareholder, has a postal service monopoly in this country. Courier services are provided by a number of private businesses as well

36
Q

South Africa’s infrastructure

The media

A

The print media such as magazines and newspapers, communicates with the public by providing both general and specific information. The electronic media included radio, television, telephone, email, internet and fax services. The media is the foundation of a knowledge based economy

37
Q

South Africa’s infrastructure

Transport

A

In SA, rail transport and all ports are part of transnet a public sector corporation. It’s subsidises Transnet Freight Rail handles rail services and portnet handles maritime services. Most air transport is provided by South African Airways. South Africa’s 10 airports are managed by the Airports Company of South Africa (ACSA) which is a public sector corporation

38
Q

South Africa’s infrastructure
(Transport)
i Road transport

A

South Africa’s road and street measured approximately 754609 km in 2010. Some roads are the responsibility of national government, others of the provincial governments and still others of municipalities. About 87% of all land freight tonnage is carried by road, which the Mainer carried by rail. Maintenance of roads has been neglected over the past 25 yrs. This seriously increases the cost of transport and of exports. Generally, road transport costs anything between 30% and 50% more than rail transport- additional costs that cargo owners and end customers have to hear

39
Q

South Africa’s infrastructure
(Road telephones)
1.Rail Transport

A

Transnet LTD a public corporation for the important activity of freight transport TFR has a rail network . The network connects the pets and hinterland of South Africa as well as the rail networks of sub saharan region. TFR infrastructure represents about 80% of Africa’s rail infrastructure. It’s freight trains serve customers in the major sectors of mining, manufacturing and agriculture
Certain lines such as Richards bay line do not have the necessary capacity and are slowing the export of coal in particular. Irregular services on some lines make the bulk export of agricultural products such as maize, impossible. Exports suffer as a result. Upgrading the freight rail infrastructure key to the objective of shifting more freight from the road network to the retail network as well as finding the balance between road and rail in respect of the transportation of goods

40
Q

South Africa’s infrastructure
Rail transport
Metro rail

A

Is a transport subsidiary responsible for urban and long distance rail transport. 14% of urban commuters make use of rail transport. It’s infrastructure and assets comprise 497 stations. Public transport strategy aims to complement BRT with priority rail corridors. Gaitrain, a rapid rail commuter service between Pretoria and Joburg is a joint venture with the government in terms of the Natmap

41
Q

South Africa’s infrastructure
Rail transport
What is the Transnet pipeline

A

Is a fuel and gas pipeline business which pumps and manages the storage of petroleum and gas products through its network of high pressure, long distance pipelines. Pipelines

42
Q

South Africa’s infrastructure

Ports and marine transport

A

SA has six major ports: Durban, Richards bay, east London, port Elizabeth, table bay, and Saldana bay. Durban is the largest port in Africa and the 9th largest in the world. Tangent manages all ports which are continuously upgraded but the delay in ports still occur regularly at great cost to importers
SA does not have a national sea line but it does have a large coastal commercial fleet that is privately owned
There are 57 international cargo ships owned by South African companies, only six are South African registered meaning that about 95% of South Africa’s foreign trade is seaborne implying that there is room for South Africans in this industry

43
Q

South African infrastructure

Air transport

A

SAA is South Africa’s National air carrier and provides an extensive network of flights between all major centers within SA and between SA and some neighboring countries and major overseas cities.
SA has a number of airlines flying between major cities and to some of its smaller ones. The most important ones are 1time, mango, khulula, British airways, SA express and nationwide
SAA is by far Africa’s biggest airline. SAA local network includes connection to more than 20 South African destination and more than 20 cities across the rest of the continent
King Shaka, or thambo, pilanesburg, Nelspruit and lanseria

44
Q

South Africa’s infrastructure

Energy

A

South Africa has well developed energy infrastructure which provides an almost uninterrupted supply without severe shortages. The quality of supply is better than the norm for developing countries and compares well with that of some developed countries. South Africa’s energy infrastructure comprises electricity, liquid fuel, gas and renewable sources

45
Q

South Africa’s infrastructure

electricity

A

South Africa generates 2-3 of Africa’s electricity but the price escalates at a harmful rate . Electricity is supplied by cable and transmitted by means of power lines. Eskom is the national provider and it produces 95% of the electricity that is consumed in SA. Electricity is South Africa comes in three major forms

  1. Coal provides 92% of electricity consumed in SA. The mines that supply the coal belong to private business
  2. Water from which hydroelectric power is produced is the only renewable source of energy used in SA on a significant scale
  3. Nuclear power is generated by the Kroeber nuclear power near cape town Which is entered into Eskom national grid. It is owned by eskom and provides more than 7% of SAs electricity. Eskom envisages the construction of more nuclear power stations
46
Q

South Africa’s infrastructure

Liquid fuel

A

Crude oil, petrol, paraffin, and aviation fuel are the most important liquid fuels used in SA. Retail distribution of all fuel is effected by means of hundreds of fuels stations that belong to private businesses
The central energy fund (CEF) a public sector enterprise is involved in the search for appropriate energy solutions to meet the future energy needs of SA, including gas, electrical power, solar energy, low smoke fuels, biomass, wind and renewable energy sources

47
Q

South Africa’s infrastructure
(Liquid fuels)
Where do liquid fuels come from

A

Foreign sources. SAs crude oil imports are mostly from Arab and African countries then the crude oil is refrained at refineries in Cape Town and Durban which belong to some of the major private sector companies such as caltex and bp
Domestic sources: two major domestic producers supply approximately 30% of domestic consumption
- Sasol, private company, provides most of South Africa’s locally produced fuels. It makes use of a chemical process to produce petrol and other fuels from coal
- petroSA south of Mosel bay converts natural gas to petrol and supplies about 7% of SAs liquid fuel needs. The refinery and gas fields belong to the government

48
Q

South Africa’s infrastructure
(Gas)
Two sources

A

Natural gas: two fields off the coast of mossel ay provide all the natural gas produced in SA to petroSA for processing
Coal gas: is processed and distributed by sasol. Pipelines are used to distributed the gas to industrial and private users on the reef and in the Durban area. Sasol also mines coal gas in Mozambique and uses a pipeline to bring it to SA

49
Q

South Africa’s infrastructure

Renewable sources

A

Part from water used for hydroelectric power, the only other renewable source of energy that is used on-a significant scale in SA is firewood. This is used for cooking and heating in rural areas. 50% of rural households use wood. In some areas the resources are almost completely depleted and in other areas they are under heavy pressure. The alternative is to use coal. Solar wind and tidal energy are at experimentation levels although at different stages

50
Q

South Africas infrastructure

Water

A

Water will increasingly become limiting resources in SA, and supply will become a major restriction to the future socio-economic development of the country, in terms of both the amount of water available and the quality of what is available
To augment supplies, South Africa obtains water from Lesotho. Other sources of water are the desalinisation of seawater like Plettenberg Bay and Mossel Bay and the recycling of water. It is imperative that South Africa develop both water-efficient economies together with a social ethic of water conservation and ultimately a culture of sustainability of water resource usage

51
Q

South Africas infrastructure

economic opportunity

A

The removal of legal restrictions that blocked the entry of blacks into the mainstream economy and the introduction of policies to promote new opportunities for and increase the levels of participation of black people in the ownership, management, and control of economic activities were successful

52
Q

South Africas infrastructure
( Exclusion)
economic exclusion

A

economic exclusion is not a policy of the government. It was partly inherited from the apartheid past and partly caused by the extensive demand of extreme poverty. but, it is partly also due to incompetent administration and corruption

53
Q

precious metal and stones

A

(gold and diamonds)

54
Q

Energy minerals

A

( gas, coal, and uranium)

55
Q

Metallic minerals

A

(copper and iron)

56
Q

Non-metallic minerals

A

( asbestos and salt)

57
Q

What is South Africas six major ports

A 
Durban
Richards Bay
East London
Port Elizabeth
Table bay
Saldana bay
58
Q

Africa’s biggest port

A

Durban

59
Q

Most important airlines of SA

A

1time, mango, khulula, British airways, SA express and nationwide

Economics Macroeconomics (4 decks)

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