Basic industries are the basic building blocks of an economy, and it’s important to understand them if you want to be able to make better business decisions in your day-to-day life as well as in your long-term goals. Let’s start with something very basic: what are basic industries?
The Definition
A basic industry is a sector of an economy that produces low-cost goods that are widely distributed, like food or clothing. If a country’s people can afford to buy clothes and food, then they have a high standard of living. That’s why knowing what basic industries exist in your economy can give you an idea of how well off you are as a nation.
The Significance
Basic industries are businesses that produce raw materials, goods, and services that other businesses then use to create products. For example, a steel company produces raw materials (steel) that are used by construction companies to build homes. These construction companies then use lumber produced by lumber companies to build their homes; they also use hardware sold at hardware stores, electricity produced by power plants, and so on.
How to Invest in Basic Industries
While basic industries don’t typically offer strong or consistent returns, investors are often attracted to these investments for their relatively low risk. If you aren’t looking for a lot of return on your investment but still want a safe place to park your money, consider investing in basic industries. Knowing what they are and how they work can help you make smarter choices with your money. Here’s everything you need to know about basic industries.
Examples of Companies in Basic Industries
Examples of companies that operate in basic industries include American Express, AXA, Boeing, Caterpillar, ExxonMobil, 3M and Unilever. These companies make up a diverse group operating in different markets. For example American Express’s main business involves providing credit cards to its clients; AXA offers insurance services while Boeing designs aeroplanes.
Sustainability Considerations in Basic Industries
Sustainability considerations are often overlooked in basic industries. However, more and more people are looking to buy sustainable products, which means that all businesses need to take sustainability into account. We have compiled a list of all our blogs about sustainability for you here.