Classification of Business/Sectors of the Economy

Secondary Sector

Part of the economy concerned with manufacturing finished or semi-finished goods through processing, transforming, and assembling raw materials. All of manufacturing, processing and construction lie within this sector. Business activities include metal working, car production, textile production, chemical and engineering industries, engineering, food processing, construction and ship building, etc.

De-industrialisation

The decline in manufacturing in favour of services

Why does it happen?

-Exhaustion of raw materials -Loss of markets -Social conditions (states of war) -Environmental upheaval -Production is shifted to trading partners (LEDCs) where the costs of labor are lower -Trade deficit (must be severe), can reduce the resources needed to support domestic manufacture

Business activity is classified into three sectors

They are: Primary sector Secondary sector Tertiary sector

Interdependence

Businesses in each of the three sectors rely on each other. Workers in both the secondary and tertiary sectors rely on the primary sector for their food. The production of any good or service normally involves a chain of production. E.g. Cereal farmers (Primary) rely on bakers (Secondary) for their sales of wheat. Bakers may depend on advertising agencies (Tertiary) to advertise their products. The transport industry (Tertiary) relies on the oil industry (Primary) to provide fuel for its vehicles.

Primary Sector

Part of the economy concerned with the direct extraction of raw materials from Earth's surface, through agriculture, mining and quarrying, fishing, hunting and forestry.

Tertiary Sector

Part of the economy that involves providing a wide variety of services. -Commercial services: e.g debt collection, freight delivery, printing and employment agencies -Financial services: banking, insurance, investment advice and pensions -Household services: plumbing, decorating, gardening and house maintenance -Leisure services: television, tourism, hotels and libraries -Professional services: accountancy, legal advice, teaching and medical care -Transport: train, bus, taxi and air services

Changes in Sectors

The number of people employed in each sector does not stay the same. Different sectors grow and decline over time. In the UK, before the Industrial Revolution began, most production was in the primary sector. During the 19th century, secondary production expanded rapidly as manufacturing grew during the Industrial Revolution. However, in the last 60 years the tertiary sector has started to expand at the expense of both agriculture and manufacturing. The decline in manufacturing is called de-industrialisation.

Quarternary Sector

The portion of the economy concerned with the collection, processing, and manipulation of information and capital. It is sometimes included with the tertiary sector, as they are both service sectors. Examples: information services such as computing, ICT, consultancy, scientific research, finance, administration, insurance, and legal services

Explain the interdependency of primary, secondary and tertiary sector of an economy

The primary sector provides the base for all economic activities as it involves production at the most basic level through the exploitation of natural resources. The goods produced are processed through manufacturing in the secondary sector. This sector depends upon the primary sector for raw materials and in turn, provides a market for the producers of the primary sector. The tertiary sector provides support to the process of production. It includes transportation, storage, marketing and sale of products. Other services include banking and communication. These sectors are necessary to aid production while themselves deriving their sustenance from it. Thus, it can be concluded that all three sectors of the economy are interdependent. Note: For extra points, use examples like the one in previous flashcard