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The modern economy can be divided into three sectors that reflect the economic development of that society. This lesson will discuss and explore the interaction between the primary, secondary and tertiary sectors of the modern economy.

Economic Change

Our nation’s economy, like most modern world economies, has developed from one built on the extraction of raw materials for consumption and sale to one that is now more dependent on revenue from services. This economic shift is important to understand from a sociological standpoint because it impacts the proportion of the population engaged in various activities that support the economy.In this lesson, we will explore economic change by discussing the three types of sectors of an economy: primary, secondary and tertiary. These sectors can be viewed as a continuum, starting with the primary sector, which is the part of the economy generated by extracting raw materials directly from the earth for consumption or sale; moving next into the secondary sector, which is the part of the economy that transforms the raw materials into goods for sale or consumption; and finally the tertiary sector, which is the part of the economy that involves the sale or trade of services instead of goods.

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Primary Sector

The primary sector involves the extraction of raw materials from the earth. This extraction results in raw materials and basic foods, such as coal, wood, iron and corn. The types of workers in this sector include farmers, coal miners and hunters.In the U.S. and similarly in most other modern world countries, there is a decline in the proportion of the population that works in the primary sector.

Currently, only 3% of our nation’s labor force is engaged in primary sector activity. This is a big change from the mid-19th century in which two-thirds of the labor force was engaged in this sector.

Secondary Sector

The secondary sector involves the transformation of raw materials into goods. This transformation results in wood being made into furniture, steel being made into cars or textiles being made into clothes, as examples. The types of workers in this sector include a seamstress, factory worker or craftsman.The development of this sector can be attributed to demand for more goods and food, which leads to industrialization.

Only so much can be done in the primary sector before there is a natural limit on how much can be extracted. When an economy moves into the second sector, new farm techniques are used, and industrialization changed how goods can be transformed, distributed and sold. Currently, 20% of the U.S. labor force is involved in the secondary sector.

Tertiary Sector

The tertiary sector involves the supplying of services to consumers and businesses. This sector provides services to the general population and businesses, including retail, sales, transportation and restaurants. The types of workers in this sector include restaurant bartenders, accountants and pilots. The service industry makes up 80% of the labor force today.

Future Sectors

Some economists argue that there are two additional sectors that make up the modern world economy.

These sectors are the quaternary and the quinary sectors.The quaternary sector is said to be the part of the economy that consists of intellectual activities, such as scientific research, education and information technology. Workers in this sector include scholars, researchers and librarians.The quinary sector is argued to be made up of the highest-level decision making in that society or economy. Examples of workers in this sector would include top CEOs of companies, presidents of universities and media executives.As our modern economy grows and develops, it is said that these sectors will drive the economy more so than primary and secondary sectors. Developing countries, however, still heavily rely on the first two sectors for economic support and development.

Lesson Summary

The economy of a modern world can be discussed in terms of three sectors: primary, secondary and tertiary. The primary sector is the part of the economy generated by extracting raw materials directly from the earth for consumption or sale. The secondary sector is the part of the economy that transforms the raw materials into goods for sale or consumption. The tertiary sector is the part of the economy that involves the sale or trade of services instead of goods.Some economists argue that there are two additional sectors that make up the modern world economy. These sectors are the quaternary and quinary sectors that involve intellectual activities and high-level decision making as part of the economy.

Learning Outcomes

Upon completing this lesson, you should be able to:

  • Describe the three sectors that make up the economy of a modern world
  • Identify how much of the population is involved in each sector and any changing trends in these sectors
  • Explain the proposed quaternary and quinary sectors and their potential impact on the economy

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