Tertiary sector of the economy: definition, industries and interesting facts

We have long been accustomed to such concepts as agriculture, industry and services. But why do we consider them in our article? So simplistic is the three-sector model. It was developed back in 1935-1949. The tertiary sector of the economy includes exactly what we mean by the sphere of services. Depending on which sphere is dominant in the production plan, you can determine the stage of development of society.

To date, apart from the primary, secondary and tertiary sectors identified by Fisher, Clarke and Fourast, the Quaternary is also considered - the product of the modern stage, the so-called knowledge economy.

Concept

The theory of sectors, or structural changes, was developed in the 1930s and 1940s by Alan Fisher, Colin Clarke and Jean Furaste. Scientists divided the economy into three sectors of activity:

• Primary . Its main purpose of operation is the extraction of raw materials. It includes agriculture. Also, the primary sector is some kinds of industry. Among them are fish, mining and forestry.
• Secondary includes all other industrial production and construction business.
• The tertiary sector of the economy is the sphere of services, education and tourism.

According to Fisher-Clark's theory of structural changes, with the development of society, the focus shifts from the primary sector to the secondary sector, and then to the tertiary sector. Scientists believed that this was due to a change in the nature of consumer demand. With the increase in per capita income, the demand for agricultural products declines, for industrial products - first increases, and then begins to fall, but for services - constantly becomes more. Therefore, it is not surprising that in the rich countries the dominant sector is the tertiary sector.

Clark distinguished three stages of development of states. The first one is agrarian. With it, productivity is growing at a slow pace. The second is industrial. It is associated with the development of the secondary sector and the achievement of a peak in growth. The third stage is based on the prevalence of the service sector. It was with her that Fourieres linked the dream of a new blossoming of education and culture, the humanization of society and the overcoming of poverty.

Which industries are in the tertiary sector of the economy?

It includes those activities in which people apply their knowledge in order to improve productivity, efficiency, potential and stability of work. The branches that make up the tertiary sector of the economy do not provide a ready product, but provide services. They are involved in intangible production. The structure of the tertiary sector of the economy used to include information processing, but now all operations with data are considered separately. This is due to the emergence of the concept of the knowledge economy. It is a new stage in the development of postindustrial society. Therefore, the production of information is now generally attributed to the Quaternary sector.

However, some economists do not consider it necessary to complicate everything and use the standard Fisher-Clark model. The tertiary sector includes the provision of services not only to enterprises, but also to end-users. This can be as the transportation of goods from the manufacturer to the buyer, and the fight against pests or the organization of recreational activities. In the process of providing services, there is often a change in goods, as in the restaurant business. However, the focus is still on interaction with people and their services.

Difficulties defining

Sometimes it is difficult to understand where the secondary ends and the tertiary sector of the economy begins. Sometimes the police, troops, the government itself, charitable organizations are also referred to the latter. Therefore, special classification systems were developed in international law. They allow you to determine whether a product is tangible or not. One such system is the International Standard Industrial Classification developed by the United Nations.

Theory of progress

Over the past hundred years, the tertiary sector of the economy has gradually become dominant in the developed countries of the world. They became postindustrial. The primary and secondary sectors have completely lost their positions. Foursty distinguished three stages of development of countries. In pre-industrial society 70% of people are employed in the primary sector, 20% - in the secondary sector, 10% - in the tertiary sector. Then comes the second stage. Furaste called it industrial.

At this stage in the primary sector, about 40% of people are employed, in the secondary sector - 40%, in the tertiary sector - 20%. It is associated with deep automation of production. This leads to the fact that the importance of the tertiary sector of the economy is growing. In post-industrial society, 70% of the economically active population is employed in it, while in the primary sector it is only 10%, in the secondary sector it is 20%. Some modern scientists recognize two more stages of development associated with the allocation of quaternary and pentenary sectors.

Today, the service sector in developed countries is developing most dynamically. Employed in it often receive more than industrial workers. Gradually shifting the focus from agriculture and extractive industries to industry, and then to the service sector is typical for all economies. The first to join this trend was the United Kingdom. The speed with which countries become postindustrial, with the passage of time only increases. The world is changing a few years faster than before in a hundred.

Problems of the tertiary sector of the economy

Companies that are engaged in the provision of services often face problems that are unknown to the producers of goods. What is a tertiary sector? This is primarily intangible production. And consumers have a hard time understanding what they will get, and what will be the cost. Many companies providing consulting services do not give any guarantees of the quality of their work, but they demand payment for it. Here everything depends on the skills and experience of people.

The remuneration of staff involved in the provision of services constitutes a significant part of its cost. And here the companies of the tertiary sector are unlikely to be able to save. Manufacturers can use new technologies, simplification, economies of scale to cut costs. But the company that provides services, is forced to raise prices in order to improve their quality. Another problem is product differentiation. How to choose between consulting firms? At first glance it seems that they provide identical services. Therefore, to overstate the price can often only the most respected firms that are recognizable brand and deserve recognition.

Examples

It is easier to understand what it is if we consider what sectors are part of the tertiary sector. Among them:

• Sphere of entertainment.
• Government.
• Telecommunications.
• Hotel and restaurant business
• Tourism.
• Mass media.
• Health care.
• Information Technology.
• Recycling.
• Consulting.
• Gambling.
• Retail and wholesale.
• Franchising.
• Operations with real estate.
• Education and others.

Financial services include banking, insurance and investment management. Professional - accounting, legal and assistance in business management.

List of States by the size of the service sector

Estimating the size of the tertiary sector allows us to see the stage of development of society. Consider the list of countries on the contribution of their services sector to the gross domestic product. In the first place the United States. In 2015, the cost of the services provided amounted to 14.083 trillion US dollars. Thus, the US is the state with the most developed tertiary sector. On the second place is the European Union. In 2015, the countries included in it, together provided services in the amount of 13.483 trillion US dollars. In third place is China. The cost of its tertiary sector in 2015 was 5.20 trillion dollars. On the fourth - Japan. The contribution of its service sector to the country's GDP amounted to 3,078 trillion dollars in 2015. On the fifth - Brazil. In it, in 2015, services were provided in the amount of 1.340 trillion.

In the Russian Federation

The tertiary sector of the Russian economy in 2015 was in the fifteenth place in the world in size. His contribution to the country's GDP amounted to 720 billion US dollars. It employs 58.1% of the economically active population. This means that the country is not yet a post-industrial one.

In agriculture, 9% of the population, in industry - 32.9%. However, the tertiary sector is responsible for the largest part of Russia's gross domestic product. About 58.6% of GDP is generated in it. The contribution of agriculture to the gross domestic product of Russia is 3.9%, industry - 37.5%.

Economics of knowledge

In the Quaternary sector of the economy, some modern economists prefer to allocate operations related to the creation, receipt and processing of information. For example, consulting, education, financial planning, blogging, design.