Service Sector, Trade, and Tourism: Key Economic Drivers
The Service Sector: An Overview
The service sector is characterized by not producing material goods. The more advanced a society is organized, the more important the service sector becomes.
Public Sector
The public sector is managed by the government of a nation to meet the demands of the population, and this requires certain levels of welfare.
Private Sector
The private sector is driven by private initiative and profit.
Business
Business involves the purchase and sale of products and goods. The ultimate goal is profit.
The Market
The market is where sales operations are carried out. Specifically, it is a view of the potential buyer. In the abstract, there is no visible merchandise.
The Stock Market
The stock market is where shares are bought and sold. Shares, as capital of a company, are contributions from individuals to the capital of a company. Shareholders invest money they can afford, hoping the business grows. When they deem it appropriate, shareholders can sell their shares to others; this is done on the trading floor of the stock exchange. Major shareholders can join the board of directors and make decisions about the company’s future.
Speculation is betting that certain stocks will rise in value. One must have the ability to know whether a company will have profits or not in the near future.
Stock Indexes
Stock indexes track the performance of the most important business markets in each country.
- Dow Jones: The most famous in the world, based in New York, it sets the economic trend worldwide.
- IBEX 35: The index that tracks the 35 most important companies in Spain.
A stock market crash occurs during a crisis when companies shed their shares, selling them at discount prices. If the trend is widespread, it can lead to a domino effect, causing a fall in the stock markets.
Bankruptcy: When a company loses its capital and cannot afford to make its payments.
Trade
Retail Trade
Retail trade involves selling directly to consumers, typically families.
Wholesale Trade
Wholesale trade involves buying from producers and reselling to retailers in large quantities.
Supermarkets and Hypermarkets
A supermarket is an establishment of a certain size where self-service is employed. Hypermarkets are stores and shopping centers that occupy large areas, often located on the outskirts of large cities.
Other Forms of Selling
Other forms of selling include catalog sales, credit card sales, fax, and the internet.
International Trade
- Imports: Purchases of foreign products. The buyer pays with their currency.
- Exports: Sales of domestic products to other countries. Currencies are received as payment.
Balance of Payments
The balance of payments is an accounting record of a country’s economy. It reflects the balance between imports and exports. The balance is positive (surplus) if a country sells more than it buys, and negative (deficit) if it buys more than it sells.
Transportation
Rail
Rail transport surged in the early 19th century with Stephenson’s locomotive in 1814. In our century, it faces competition from air and road transport, but there has been a leap with high-speed trains.
Highway
Highway transport is the individual transport system par excellence. Its asset is its flexibility in scheduling. However, it generates congestion problems.
Maritime Transport
Maritime transport has the advantage of low-cost fares, large load capacity, and independence from fixed lines. Ships have evolved, seeking greater specialization and load capacity.
Air Transport
Air transport is the primary means of passenger transport for medium and long distances. Its advantage is speed, and its disadvantage is the impossibility of carrying heavy loads.
Tourism
Tourism involves the temporary movement of people to a place other than their work and residence, for at least 24 hours.
- Coastal: Sun and beach tourism, the most practiced, lasting 1-5 weeks. In Europe, the Mediterranean coast is popular, and in the U.S., the Pacific coast.
- Cultural: Regions or cities rich in historical and artistic heritage (e.g., Spain, Venice, Italy).
- Rural: Rural houses or agricultural areas.
- Green: Protected natural areas.
- Winter: Ski and mountain resorts, such as Sierra Nevada and Andorra.
Regional Example
Domestic Trade
Our network of medium and large stores is fully developed, not just in major cities but also in medium-sized towns like Lorca and Molina.
Foreign Trade
We export our orchard products abroad, and companies in the Escombreras Valley work in fertilizers and chemicals. General Electric makes us the largest exporters of plastic.
Road Network
The road network is perfectly adequate, with a motorway network that allows travel to any point in the community.
Rail
In Cartagena, there is a train station that allows communication with Madrid’s network and the east coast. However, communication with Andalusia is not further developed.
Port
The port of Cartagena has been enhanced, transitioning from military to tourist-commercial use. The Escombreras dock allows the export of industrial products in large quantities and the receipt of oil for the refinery.
Airport
The airport of San Javier is obsolete considering the needs of the tourist area. A better solution is expected in Valladolises within a decade.
Tourist Activity
Tourist activity focuses on the Costa Cálida and the Mar Menor, with the greatest presence in La Manga. There is also a lot of apartment rental, and tourism has a seasonal character. The region also has rural and cultural tourism in areas such as the Northwest, Murcia, and Cartagena.