Basic Definitions

Production is creation of products (goods and services) for use or sale using labor and machines, tools, chemical and biological processing or assembly. This term may relate to a whole range of human activities from manual labor to high technology, but the most often it applies to industrial production, that is, when raw materials (in a broad sense) are converted into finished products. Finished products could be sold to other companies for the production of more complex products, such as airplanes, household appliances, furniture, sports equipment or cars. Also, the finished products could be sold to wholesalers that, in turn, sell them to retailers, and then retailers sell products to consumers.

The modern production includes not only material production (the production of goods) but also the non-productive sector, that is, production of immaterial values and services (for example, new scientific discoveries, technical inventions, public education, culture, art, health care, consumer services, management, financing and lending, sports, etc.). The development of the non-productive sector depends crucially on the production of material goods (technical equipment and production volume).