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What Are Sectors of Economy?

The building of a home from lumber is part of the secondary economic sector.
Retail businesses are part of the economy's tertiary sector.
Logging is typically included in the primary sector of the economy.
Mining is part of the primary sector.
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  • Written By: Sheri Cyprus
  • Edited By: Bronwyn Harris
  • Last Modified Date: 22 September 2014
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An economic sector is a certain type of business activity within an economy. Economics is part of the social structure of a society and is concerned with how people produce and consume goods and services. What types of goods and services are produced and consumed in a society depends on geography and social customs, among other factors. There are different ways of dividing the sectors of the economy, but one common method is called the "three-sector hypothesis," which divides major economic activity into primary, secondary, and tertiary sectors.

The primary sector includes obtaining and refining raw materials such as wood, steel, and coal. Workers in this sector include loggers, steelworkers, and coalminers. All types of natural resources industries such as fishing, farming, forestry and mining are a part of this group.

The secondary economic sector deals with the processing of raw materials into finished goods. Builders and potters are examples of workers in this sector; lumber from trees is made into homes and clay from the earth is made into pottery. Brewing, engineering, and all types of processing plants are part of this category.

The tertiary sector has to do with services to businesses and consumers. Dry cleaners, real estate agents, and loan officers fall into this category of workers. Transportation, banking, tourism, and retail stores are also part of the sector.

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The movement of goods and services through the primary, secondary, and tertiary sectors is referred to as the chain of production. For example, trees are sourced (primary), then the pulp is processed to create paper (secondary), and then the finished product is sold in stores (tertiary). Some people consider government and education to be solely part of the tertiary sector, while others add additional sectors — the quaternary and the quinary — to the three main sectors.

The quaternary sector is said to be that of intellectual organization in a society such as government, research, cultural programs, information technology (IT), education, and libraries. The quinary sector is thought to be related to the quaternary sector, but includes only the senior management levels. Top management in non-profit organizations, media, arts, culture, higher education, science and technology, and government are all included in the quinary economic sector.

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Discuss this Article

anon316320
Post 6

What about the fourth and fifth sectors?

anon274342
Post 5

Is an occupational shift good for economic development?

GlassAxe
Post 2

Upon reading this article, it became clear to me that these economic sectors work in a cycle. If you put the four economic sectors in an individual and put them into a two-dimensional diagram, you could come up with a cross between a directional cycle and a Venn diagram.

For example, factors in the quaternary economic sector, like government, research, and advancements in education, influence the sourcing of raw materials. Demand generated in the tertiary sector, and advancements in processing techniques created by the secondary economic sector, influence resource mining and refining techniques in the primary economic sector.

You can find the same types of relationships in the other economic sectors. This was a unique way of looking at how economic sectors interact. It actually helped me get a better understanding of what government has to consider when creating policies and regulations.

GlassAxe
Post 1

What a great article. I am a business student, but I have never thought of an economy on the level that the author explained it in this article.

I always broke the economy up into its separate industries and sectors and examined each industries function. I have also examined the interactions between two different industries, but I have never grouped the industries together in this way.

I thought this was a very interesting and informative article. It gave me new perspective on the way the economy operates. I learned something new today!

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