Sectors of Industry (AQA GCSE Business)

An Introduction to the 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

Diagram: The main Sectors of Industry

Businesses operate in the primary, secondary or tertiary sector

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

• In the UK, around 2% of the working population is employed in businesses in the primary sector

• 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

Graph: 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)

Graph analysis

• 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

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 the UK, around 22% of the working population is employed in businesses in the secondary sector

• 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

Graph: 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)

Graph analysis

• 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

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

• In the UK, around 76% of the working population is employed in businesses in the tertiary sector

• 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

Graph: 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)

Graph analysis

• 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