Economic Sectors Research Paper Starter

Economic Sectors

To help simplify an economic system, it can be theoretically divided into three "sectors." Each of these sectors—primary, secondary, and tertiary—represents a phase in the life and distribution of goods and services within an economy. This paper provides an in-depth analysis of each sector of an economy, first as an independent component and then as part of an overall economic system.

Keywords Gross Domestic Product (GDP); Global Economy; LDC; Primary Sector; Secondary Sector; Tertiary Sector

Economic Sectors


President Harry Truman, like so many of his predecessors and successors, had a problem getting a concurring set of opinions from his economic advisors. Each seemed to offer a different view on any given issue, frustrating the man whose mantra of leadership seemed to be "the buck stops here." He once complained out loud, "All my economists say, 'on the one hand … and on the other hand ….' Someone give me a one-handed economist!" ("Out on a limb?," 2008).

The source of Truman's befuddlement is the fact that economics is extraordinarily complex. The study of the relationship between business and consumers, how entrepreneurs develop economies as well as how buyers purchase goods and services, is subject to a myriad of external and internal factors, giving it a vast, often convoluted, and certainly fluid nature.

Helping simplify an understanding of economics is the theoretical division of a given economic system into three "sectors." Each of these sectors—primary, secondary, and tertiary—represents a phase in the life and distribution of goods and services within an economy. This paper provides an in-depth analysis of each sector of an economy, first as an independent component and then as part of an overall economic system.

The Primary Sector

Daniel Webster once said, "When tillage begins, other arts follow," adding, "The farmers therefore are the founders of human civilization" (Bartlett, 1919). Indeed, in these comments, Webster could have been speaking of all of the professions that make up what is known as the "primary sector" of the economy.

The primary sector involves the harvesting, mining, Quarrying, and collection of natural resources. Those professions that contribute to this sector of the economy include farming and other forms of agriculture, mining, forestry, and fishing. These professions are time-honored traditions, with families often engaging in such practices over generations.

In the fishing industry, for example, the profession is a way of life, one that many see as the only life they have ever known. In southern California, the sardine fishing industry is one that spans generations. One fisherman practices his art just as his father and his grandfather did, and the company to which he sells his fish also dates back three generations. As this particular industry has fallen on hard times, many are contemplating moving into another field and are telling their children to do the same. Then again, the sea is not a workplace one can easily leave behind. One child, who spent his school vacations helping the crew on his father's boat, went against his mother's wishes to stay in school and left the 10th grade to fish full time ("San Pedro," 2008).

Farming is another primary sector industry that is not just a job—it is a way of life handed down from generation to generation. One New Jersey farming family, for example, has operated their farm since 1720. In fact, in 1988, dozens of farming families from Maine to Delaware were honored for successfully operating their farms for at least 200 years (Ginzburg, 1988). A third-generation farmer in Minnesota best describes a feeling that farming is in his blood, and he can think of no other pursuit in life: "I had other jobs in the winter. But by January I couldn't wait to come back. It just sticks with you" (The Reporter, 2008).

In industrialized nations like the United States, primary sector vocations like the ones just described are entered into by choice. However, mining, fishing, farming, and other forms of activity are a matter of survival. In truth, in industrialized nations, fewer people tend to participate in primary sector jobs than in secondary or tertiary sector areas. In the US, for example, farm employment dropped precipitously in the 20th century, from 12.5 million in 1930 to 1.2 million in the 1990s. Additionally, 60 percent of those farmers only worked on farms part-time, holding other jobs to supplement their incomes ("American agriculture," 2008).

While primary sector jobs seem to be waning in volume in the wealthier states, industries that fall under this heading appear to be greater in size and economic percentage in developing nations. In South Africa, for example, the mining industry remains a vibrant economic contributor, directly accounting for 8.8 percent of the nation's gross domestic product (GDP) in 2011. In Uzbekistan, a nation in which 60 percent of the population resides in rural areas, agriculture contributed 18.5 percent of the nation's 2012 GDP. In the Philippines, nearly one-third of the country's work force was employed by the agriculture industry in 2012, but because of faltering industry infrastructure, farming only contributed 11.8 percent of that country's GDP.

The Primary Sector in Less-Developed Countries

Significant research has uncovered a connection between the primary sector and less-developed countries (LDCs). In the case of the Philippines discussed above, for example, the major contingent of Filipinos who work in the agricultural industry do so despite a lack of sizable return on their toil. In fact, many residents of LDCs working in the primary sector are undereducated, poor, and undertrained. In some situations, the work performed in this sector is reflective of a lack of national support and/or infrastructure in the face of changing socio-economic and political conditions.

In one 15-year study, the realities of faltering LDCs contributed to the heavy and unsustainable practice of deforestation. A survey of 40 LDCs cited their respective governments' inability to address expanding populations as a major contributor to unsustainable logging practices. Interestingly, such practices were mitigated after the introduction of international non-governmental organizations in forested areas (Jorgenson, 2008).

The sociological realities of a given LDC may also provide a profile of the primary sector worker. As stated above, a great many of those in such countries lack government support and/or vocational training, allowing them to continue their work (some of which is not sustainable over the long term) in the fields, on the boats, in the woods, or in the mine shafts. In some cases, however, the lack of access to secondary or tertiary sector employment is not based on poverty—it is based on social norms.

In rural India, for example, government sponsored reforms are enabling many men to move upward in terms of pay and opportunity. Women, meanwhile, continue to toil in the agricultural sector. By the end of the 20th century, about 55 percent of the women who worked did so in agriculture. The wage gap between men and women in India, therefore, continues to grow (Kanungo, et al., 1998).

As shown here, the primary economic sector is by no means localized entirely to the developing world. However, the development of the secondary and tertiary sectors in the post-industrial age suggests that those who gather and harvest the natural resources necessary for a global economy's needs are increasingly visible in poorer countries with less capability of developing the latter two sectors.

The Secondary Sector

Alexander Chase once said, "When a machine begins to run without human aid, it is time to scrap it—whether it be a factory or a government" ("Alexander Chase quotes," 2008). Indeed, in the economic world, the secondary sector represents the link between the collection of natural resources and those who manage the non-industrial aspects of an economy. The secondary sector also underscores the link between humans and machines within this economic context. As Chase suggested, in the modern era, one cannot operate without the other.

The secondary sector of the economy refers to vocations in which products are assembled and finished. Manufacturing, chemical production, shipbuilding, construction, energy distribution, engineering, and similar industries all fall into the secondary sector.

In many ways, the development of the secondary sector coincides with the industrialization of the modern world. For millennia, the human race excelled in farming, fishing, and other manifestations of the primary sector. In every country (but, as shown earlier, particularly in the developing world), the primary sector continues to serve a purpose in the continuing growth of the global economy, yet humanity has undergone a significant transformation from an agriculture-based to an industry-based economic system.

The Effects of Secondary Sector Development

The evolution of economies from an agrarian primary-sector level to an industrial secondary-sector level has two important benefits for the society in question. First, an increase in the secondary sector leads to greater economic development. One study indicated that increases in...

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