Stage business involved

primary woodcutter

secondary furniture maker

tertiary retailer

You will notice that there are three main stages between the cutting down of the timberand the sale of the completed desk. These stages are typical of nearly all production and they are called the levels of business activity.

Stage 1 is called the primary sector of production. This sector involves agriculture, and the extraction of raw materials from the earth, such as oil and copper ore.

Stage 2 is called the secondary sector of production. This sector involves manufacturing industry, in which raw materials are turned into finished products. Activities in the secondary sector of industry include building and construction, aircraft making, computer assembly and baking.

Stage 3 is called the tertiary sectorof production. This sector involves the commercial services that help industry produce and distribute goods to the final consumers. Activities in the tertiary sector of industry include transport, finance, banking, insurance, as well as education, health care, leisure, tourism, hotels and so on.

Which sector of industry is most important in your country? This depends on what is meant by “important”. Usually the three sectors of industry are compared by either:

- the number of workers employed in each sector

or

- the value of output of goods and services.

When these comparisons are made, some interesting differences often arise between countries. In some countries, primary industries such as farming and fishing employ many more people than manufacturing or service industry. These tend to be countries – often called developing countries – where manufacturing industry has only recently been established. As most people still live in the country area with low incomes, there is little demand for services such as transport, hotels and insurance. The levels of both employment and output in the primary sector in these countries are likely to be higher than the other two sectors.

In countries which started up manufacturing many years ago, the secondary and tertiary sectors are likely to employ many more workers than the primary sector. The level of output in the primary sector is often small compared to the other two sectors. In very wealthy countries, it is now common to find that many manufactured goods are bought in from other nations. Most of the workers will be employed in the service sector. The output of the tertiary sector is often higher that the other two sectors combined. These are often called the most developing countries.

In the UK, there has been a decline in manufacturing industry – or the secondary sector – for over 30 years. Over 60 per cent of all workers are now employed in the tertiary sector of industry. This has been a major change in the structure of industry. Many workers who lost jobs as factories closed have found it difficult to get work in the service industries. The decline in the manufacturing or secondary sector of industry is called DE-INDUSTRIALISATION.