Primary, Secondary & Tertiary Business Sectors (Edexcel IGCSE Business)

The main sectors of industry

Spec point — 1.3.1 · Primary, secondary and tertiary activities: • primary sector – extracting raw materials from the earth • secondary sector – converting raw materials into finished or semi-finished goods • tertiary sector – provision of a wide variety of services.

The main sectors of industry

• Businesses can be classified according to the industrial sector in which they operate

  • This aids comparisons between firms in the same sector

  • However, it does not capture the full complexity of the business world

    • Some businesses operate across more than one sector of industry
    • E.g. Large oil companies such as Shell extract (primary), refine (secondary) and sell (tertiary) fuel through a large network of gas stations

The main sectors of industry

• Businesses operate in the primary, secondary or tertiary sector*

The Primary Sector

Spec point — 1.3.1 · Primary, secondary and tertiary activities: • primary sector – extracting raw materials from the earth • secondary sector – converting raw materials into finished or semi-finished goods • tertiary sector – provision of a wide variety of services.

The primary sector

• The primary sector is concerned with the extraction of raw materials from land, sea or air

• Examples include farming, mining, forestry and fishing

• Less developed economies are primarily focused on the primary sector, with most people employed in agriculture and the production of food

  • There has been a global trend away from employment in primary sector industries over the last two decades
  • Only in the least developed nations is the proportion of the workforce employed in the primary sector consistently high
  • This is partly as a result of lower participation rates in education and a lack of infrastructure to support manufacturing or service provision

• Some developed economies, such as Australia (viticulture or wine production) and Norway (forestry and oil extraction), continue to have significant primary sectors

Employment in primary industries in some countries since 1991

Employment in primary sector industries in Malawi, Haiti, China, Egypt and Germany since 1991 (Source: WorldBank)

• Malawi retains the highest proportion of employment in the primary sector
• China has seen a significant decrease in primary sector activity since 1991
• Germany has a small primary sector with an economy focused on manufacturing and services well before 1991

The secondary sector

Spec point — 1.3.1 · Primary, secondary and tertiary activities: • primary sector – extracting raw materials from the earth • secondary sector – converting raw materials into finished or semi-finished goods • tertiary sector – provision of a wide variety of services.

The secondary sector

• The secondary sector is concerned with the processing of raw materials and components

  • Examples include oil refinement and the manufacture of goods such as vehicles

• In emerging economies, improved technology enables less labour to be needed in the primary sector and more workers to be employed in the secondary sector

  • The proportion of workers employed in manufacturing has risen over the last few decades
  • Many businesses have relocated production facilities to take advantage of the lower average wage rates in these economies

Employment in secondary industries in some countries since 1991

Employment in secondary sector industries in China, India, Turkey, Brazil and Ghana since 1991 (Source: WorldBank)

• China has the highest proportion of employment in the secondary sector, though it is declining
• Ghana and India have seen significant increases in secondary sector activity since 1991
• Brazil and Turkey's secondary sectors have remained relatively stable over the period 1991 to 2019

The tertiary sector

Spec point — 1.3.1 · Primary, secondary and tertiary activities: • primary sector – extracting raw materials from the earth • secondary sector – converting raw materials into finished or semi-finished goods • tertiary sector – provision of a wide variety of services.

The tertiary sector

• The tertiary sector is concerned with the provision of a wide range services for consumers and other businesses such as leisure, banking or hospitality

  • It includes a sub-sector called the quaternary sector, which is concerned with the provision of knowledge-focused services related to IT technology, consultancy or research

• Emerging economies have experienced growth in the tertiary and quaternary sectors in recent years, with many businesses now focused on the provision of consumer services

• The most developed economies have a very high proportion of the workforce employed in the provision of services, increasing focus on the quaternary sector

  • Developed economies use their wealth to fund advanced education and higher-level skills training, which further supports the growth of these industries

Employment in tertiary industries in some countries since 1991

Employment in tertiary sector industries in the USA, Germany, South Africa, Ecuador and Thailand since 1991 (Source: WorldBank)

• Highly-developed economies such as the US and Germany have the highest proportion of their workforces employed in the service industry
• Thailand's service sector employs twice as many employees in 2019 as it did in 1991
• Around half of Ecuador's workforce is now employed in service delivery

Exam Hint This is a common topic covered in multiple choice questions. Make sure that you are aware of examples of primary, secondary and tertiary sector industries.