Lecture 1: the three sectors of economy
Background information
Well, first of all we should understand what really economy is. Well know is a definition by Paul Samuelson: he defines “economy as science, that explores how people and society try to employ rare resources, which have many different uses, in order to produce different goods and distribute them among people”. In fact, this definition is more or less loosey. It is really hard to choose which definition is the best and it is really that important to know the exact definition of economy. What is important is that you understand what does economy mean in different contexts and that you understand the background of economy, with other words how does modern economy work.
Frankly speaking, economics includes the study of labor, land, and investments, of money, income, and production, and of taxes and government expenditures. Economists seek to measure well-being, to learn how well-being may increase over time, and to evaluate the well-being of the rich and the poor.
Before you will learn all the processes in domestic and global economy, it is vital to understand some basics of this science. First of all, economics is the study of the production, distribution, and consumption of goods and services — the economy. This is the primal meaning which can be traced back to the Greek words οἰκονόμος ("экономос"), i.e. "one who manages a household", a composite word derived from οἴκος "экос" ("house") and νέμω "номос" ("manage; distribute"); οἰκονομία "экономия" ("household management"). Therefore, today we're going to speak about three main sectors of every economy.
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he three-sector hypothesis is an economic hypothesis which divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and services (tertiary). It was developed by Colin Clark and Jean Fourastié.According to the hypothesis, the main focus of an economy's activity shifts from the primary, through the secondary and finally to the tertiary sector. Fourastié saw the process as essentially positive, and in The Great Hope of the Twentieth Century he writes of the increase in quality of life, social security, blossoming of education and culture, higher level of qualifications, humanisation of work, and avoidance of unemployment.
W e generally describe the economy as consisting of three sectors which could be put in a triangle:
The primary sector: agriculture, and the extraction of raw materials from the earth;
The secondary sector: manufacturing industry, in which raw materials are turned into finished products (although of course many of people working for manufacturing companies do not actually make anything, but provide a service – administration, law, finance, marketing, selling and so on);
The tertiary sector: the commercial services that help industry produce and distribute goods to the final consumers, as well as activities such as education, health care, leisure, tourism, and so on.
Primary Sector
The primary sector of the economy extracts or harvests products from the earth. The primary sector includes the production of raw material and basic foods. Activities associated with the primary sector include agriculture (both subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying. The packaging and processing of the raw material associated with this sector is also considered to be part of this sector.
In developed and developing countries, a decreasing proportion of workers are involved in the primary sector. About 3% of the U.S. labor force is engaged in primary sector activity today, while more than two-thirds of the labor force were primary sector workers in the mid-nineteenth century.
Secondary Sector
The secondary sector of the economy manufactures finished goods. All of manufacturing, processing, and construction lies within the secondary sector. Activities associated with the secondary sector include metal working and smelting, automobile production, textile production, chemical and engineering industries, aerospace manufacturing, energy utilities, engineering, breweries and bottlers, construction, and shipbuilding.
Tertiary Sector
The tertiary sector of the economy is the service industry. This sector provides services to the general population and to businesses. Activities associated with this sector include retail and wholesale sales, transportation and distribution, entertainment (movies, television, radio, music, theater, etc.), restaurants, clerical services, media, tourism, insurance, banking, healthcare, and law.
Some economists point out two more sectors, but these sectors could refer to three mentioned above.
Quaternary Sector
The quaternary sector of the economy consists of intellectual activities. Activities associated with this sector include government, culture, libraries, scientific research, education, and information technology.
Quinary Sector
Some consider there to be a branch of the quaternary sector called the quinary sector, which includes the highest levels of decision making in a society or economy. This sector would include the top executives or officials in such fields as government, science, universities, nonprofit, healthcare, culture, and the media.
An Australian source relates that the quinary sector in Australia refers to domestic activities such as those performed by stay-at-home parents or homemakers. These activities are typically not measured by monetary amounts but it is important to recognize these activities in contribution to the economy.
We also recommend you to read information on the links below:
What is economy / economics?
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ttp://www.aeaweb.org/students/WhatIsEconomics.phphttp://www.whatiseconomics.org/
Three sectors of economy
http://www.articlesbase.com/finance-articles/three-sectors-of-the-economy-1291343.html
http://www.wisegeek.com/what-are-sectors-of-economy.htm