The Various Sectors of an Economy

By Stock Research Pro • April 4th, 2009

An economic sector is defined by the type of business activity it supports in relation to the overall economy. The categorization of these various sectors can be thought of as a continuum that starts with the primary sector- the sector which is concerned with the use of raw materials (coal, oil, lumber, etc.). The sectors that follow move incrementally away from raw materials to processing to services. Collectively, these sectors make up what is known as the “chain of production” and can help us to understand how goods and services are produced and consumed in a society.

The Sectors of an Economy

While the types of goods and services that are produced and consumed varies among societies, depending on their resources and local customs, the major sectors within each are referred to as the primary, secondary, and tertiary.

The Primary Sector of the economy in agriculture, forestry, fishing, mining and other industries that convert natural resources into primary products. A decreasing proportion of the labor force in developed and developing countries work in the primary sector. The proportion in the United Sates has fallen to about 3% today from about 70% in the mid-nineteenth century.

The Secondary Sector of the economy includes those industries that create a finished and usable product from the raw materials. The secondary sector includes the production of such things as automobiles, textiles, ships and chemicals. In fact, all of manufacturing, processing, and construction is within this sector. This secondary sector can be divided into light (relatively small products) and heavy (larger products).

The Tertiary Sector of the economy involves services to both consumers and businesses, including retail and wholesale sales, transportation, entertainment, banking, healthcare and clerical. Today, more than 80% of the workforce in the United States is employed in this sector.

The Quaternary Sector of the economy is concerned with intellectual activities, such as government, research, and cultural programs.


The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

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