All of us have long been accustomed to such concepts as agriculture, industry, and the service sector. But why do we consider them in our article? So the three-sector model looks simplified. It was developed back in 1935-1949. The tertiary sector of the economy just includes what we mean by the service sector. Depending on which sphere is dominant in the productive plan, it is possible to determine the stage of development of society.
Today, in addition to the primary, secondary and tertiary sectors identified by Fisher, Clark and Furastier, the Quaternary is also considered - a 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 Clark and Jean Fourastier. Scientists divided the economy into three sectors of activity:
- Primary. Its main purpose of functioning is the extraction of raw materials. It includes agriculture. Also, the primary sector is some types of industry. Among them are fishing, mining and forestry.
- Secondary includes the rest of industrial production and the construction business.
- The tertiary sector of the economy is the service sector, education and the tourism business.
According to the theory of structural changes by Fisher-Clark, with the development of society there is a shift in focus from the primary sector to the secondary, and then to the tertiary. Scientists believed that this was due to a change in the nature of consumer demand. With an increase in per capita income, demand for agricultural products decreases, for industrial products - at first it increases, and then it begins to fall, but for services - it constantly grows. Therefore, it is not surprising that the tertiary sector is the dominant sector in rich countries.
Clark identified three stages of state development. The first is agricultural. With it, productivity grows at a slow pace. The second is industrial. It is associated with the development of the secondary sector and its peak growth. The third stage is based on the predominance of the service sector. It was with her that Furastier linked the dream of a new flowering of education and culture, the humanization of society and the overcoming of poverty.
What industries are included 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 job stability. The sectors that make up the tertiary sector of the economy do not provide a finished product, but provide services. They are involved in intangible production. The tertiary sector of the economy used to include information processing, but now all data operations are considered separately. This is due to the emergence of the concept of a knowledge economy. It is a new stage in the development of post-industrial society. Therefore, the production of information is now usually attributed to the Quaternary sector.
However, some economists do not consider it necessary to complicate things and use the standard Fischer-Clark model. The tertiary sector includes the provision of services not only to enterprises, but also to end consumers. This can be both the transportation of goods from the manufacturer to the buyer, and pest control or the organization of recreational activities. In the process of providing services, there is often a modification of goods, as in the restaurant business. However, the main focus is still on interacting with people and serving them.
Difficulty of defining
It is sometimes difficult to figure out where the secondary sector ends and the tertiary sector of the economy begins. Sometimes the latter also includes the police, troops, the government itself, and charitable organizations. Therefore, in international law, special classification systems have been developed. They allow you to determine whether the product is tangible or not. One such system is the United Nations International Standard Industrial Classification.
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 have become post-industrial. Primary and secondary sectors have completely lost ground. Furastier singled out three stages of development of countries. In pre-industrial society, 70% of people are employed in the primary sector, 20% in the secondary, 10% in the tertiary. Then comes the second stage. Furastier called it industrial.
At this stage, about 40% of people are employed in the primary sector, 40% in the secondary, and 20% in the tertiary. It is associated with deep automation of production. This leads to the fact that the value of the tertiary sector of the economy is becoming more and more. In a post-industrial society, it employs 70% of the economically active population, while in the primary - only 10%, in the secondary - 20%. Some modern scientists recognize two more stages of development associated with the allocation of the Quaternary and Quaternary sectors.
To date, the service sector in developed countries is developing most dynamically. Those employed in it often receive more than industrial workers. Gradually, a shift in focus from agriculture and the mining industry to industry, and then to the service sector, is characteristic of all economies. Great Britain was the first to join this trend. The speed with which countries become post-industrial only increases over time. The world is changing in a few years faster than before in a hundred.
Problems of the tertiary sector of the economy
Service companies often face challenges that are unknown to product manufacturers. What is a tertiary sector? This is primarily intangible production. And consumers have difficulty understanding what they will receive and what the cost will be. Many companies providing consulting services do not give any guarantees of the quality of their work, but require payment for it. It all depends on the qualifications and experience of people.
The remuneration of the personnel involved in the provision of the service is a significant part of its cost. And here, tertiary sector companies are unlikely to save. Manufacturers can use new technologies, simplification, economies of scale to reduce 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, only the most respected companies, which are a recognizable brand and deserve recognition, can often raise the price.
Examples
It’s easier to understand what it is if you look at which industries are part of the tertiary sector. Among them:
- The scope of entertainment.
- Government.
- Telecommunications.
- Hotel and restaurant business
- Tourism.
- Mass media.
- Healthcare
- Information Technology.
- Recycling.
- Consulting
- Gambling
- Retail and wholesale.
- Franchising.
- Real estate operations.
- Education, etc.
Financial services include banking, insurance and investment management. Professional - accounting, legal and business management assistance.
List of States by size of service sector
Assessing the size of the tertiary sector allows you to see the stage of development of society. Consider a list of countries on the contribution of their services to the gross domestic product. In the first place the United States. In 2015, the cost of services provided amounted to 14.083 trillion US dollars. Thus, the USA is the state with the most developed tertiary sector. In second place is the European Union. In 2015, its member countries together provided services worth $ 13.483 trillion. In third place is China. The value of its tertiary sector in 2015 amounted to 5.202 trillion dollars. The fourth is Japan. The contribution of its services sector to the country's GDP amounted to 3.078 trillion dollars in 2015. The fifth is Brazil. In 2015, it provided services worth 1.340 trillion.
In the Russian Federation
The tertiary sector of the Russian economy in 2015 was the fifteenth largest 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 post-industrial.
9% of the population is employed in agriculture, 32.9% in industry. However, the tertiary sector is responsible for the largest part of the gross domestic product of the Russian Federation. About 58.6% of GDP is produced in it. The contribution of agriculture to Russia's gross domestic product is 3.9%, industry - 37.5%.
