Primary, Secondary and Tertiary Sectors

The three-sector model in economics divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and service industries which exist to facilitate the transport, distribution and sale of goods produced in the secondary sector (tertiary). The model was developed by Allan Fisher, Colin Clark, and Jean Fourastié in the first half of the 20th century, and is a representation of an industrial economy. It has been criticized as inappropriate as a representation of the economy in the 21st century.

According to the three-sector model, the main focus of an economy’s activity shifts from the primary, through the secondary and finally to the tertiary sector. Countries with a low per capita income are in an early stage of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy.

The rise of the post-industrial economy in which an increasing proportion of economic activity is not directly related to physical goods has led some economists to expand the model by adding a fourth quaternary or fifth quinary sectors, while others have ceased to use the model.

Primary Industry:

The primary sector is concerned with the extraction of natural resources or raw materials from the earth. The economic operations of a primary sector are usually dependent on the nature of that particular place. These industries create products that will be sold or supplied to the general public. A primary industry’s economic operations revolve around using the planet’s natural resources, such as vegetation, earth water, and minerals.

Mining, farming, and fishing are examples of primary industries. This extraction yields raw materials and staple foods, coal, wood, iron, and corn.

• Genetic industry:

The genetic sector encompasses the development of raw materials that can be improved via human involvement in the manufacturing process. Agriculture, fisheries, forestry, & livestock management, are all genetic industries vulnerable to scientific & technological advancements in renewable resources.

• Extractive industry:

The extractive industry produces finite raw materials that cannot be replenished through cultivation. Mineral ores are mined, the stone is quarried, and mineral fuels are extracted in the extractive industries.

The primary industry is often the most important sector in emerging countries. When we consider animal farming as an example, it is significantly more important in Africa than in any other country.

Secondary industry:

After primary industries have accumulated raw materials, secondary industries enter into the picture. The construction and manufacturing industries are primarily included in the secondary industry. The transition of raw materials into finished items is part of the secondary sector. For example, wood is used to make furniture, steel is used to make automobiles, and textiles are used to make clothing.

In order to manufacture products that will be marketed to the general public, secondary industries frequently use massive machinery in production plants. Even human power can be employed to package these items for distribution to retailers and other locations.

Most of these businesses generate a large amount of waste, which can result in significant environmental difficulties and pollution.

Secondary industry is divided into two categories:

• Heavy industry:

Large-scale manufacturing often necessitates a significant capital investment in equipment and machinery. Heavy and massive items are among the features of the heavy industry. It caters to a vast and diverse market, which includes various manufacturing sectors.

This industry is primarily made up of construction, transportation, & manufacturing enterprises. Ships, petroleum processing, machinery production are among the most common operations in this heavy industry.

• Light industry:

The light industry usually requires a relatively smaller quantity of raw materials, lesser power and smaller area. The items produced in light industries are minimal, and they are very easy to transport.

Home, personal products, food, beverages, electronics, and apparel are among the most common operations in this light industry.

Tertiary Industry:

Tertiary industries market secondary industries’ products to consumers. They are usually not involved in creating products but rather in the provision of services to the general public and other industries. The creation of different nature services, such as experiences, discussion, access, is the most significant feature of the tertiary sector.

The tertiary sector is divided into two categories.

1. The first group consists of businesses that are into making money, such as those in the financial sector.
2. The second group consists of the non-profit sector, which includes services such as public education.

The industries of the Tertiary sector include investment, finance, insurance, banking, wholesale, retail, transportation, real estate services; resale trade; professional, legal, hotels, personal services; tourism, restaurants, repair and maintenance services, police, security, defence services, administrative, consulting, entertainment, media, information technology, health, social welfare and so on.

Tertiary industry classifications

• Telecommunications:

This is a field that deals with the transfer of signs, words, signals, messages, images, sounds, or information of any type across radio, the internet, and television networks.

• Professional services:

The tertiary sector includes a variety of professions that need specialised knowledge and training in the arts & sciences. Engineers, architects, surgeons, attorneys, and auditors are among the licenced professionals in this sector.

• Franchises:

It is a practice of selling the right to utilize a particular business model and brand for a set period.

Key differences between Primary, Secondary and Tertiary Sectors