Economics can be divided into three sectors, based on three categories of activity:
- The primary sector, also called the extractive or extractive industries, refers to the extraction of raw materials such as petroleum, natural gas, coal and mineral ores.
- The secondary sector of the Indian economy involves manufacturing or modification of materials and the production of goods.
- The tertiary sector consists of institutions and organizations that support the distribution and sale of goods made in the secondary sector.
A good understanding of these sectors can be helpful to you whether you want to launch your own business or you want to create a credit note and debit note. Visit this website for more info. So, let’s now take an indepth view of all these sectors.
The primary sector or the Agriculture and Allied Sector, is the first economic sector that utilizes natural resources directly. It involves industries such as agriculture, fishing, mining, and forestry. The major product produced in this sector is agricultural products and forest products. The importance of this sector is undeniable since these constitute a majority of the natural edible items. This sector’s main function is to provide food to the people in other sectors of the economy. It employs a large portion of a country’s workforce, especially in developing countries. Developing countries have a low level of industrialization and a higher portion of their workforce is employed in this sector. They export raw materials to developed countries for further processing. The primary sector does not deal with any form of financial transactions or services. Any country needs to ensure a healthy primary sector for the survival of its economy
The secondary sector is responsible for taking the products of the primary sector (agriculture) and turning them into finished goods. Products from this sector are raw materials for the tertiary sector (services, retail, and restaurants). The secondary sector requires large amounts of energy, machines, and factories, and this leads to the release of air pollution.
Manufacturing companies are also an example of secondary sector. For example, a car company would be considered part of this industry because it takes raw materials (such as steel) to produce vehicles. The car company sells these vehicles to other businesses or consumers. In addition, companies that work in construction are also included in the secondary sector because they build houses and other buildings.
To avoid confusion, it is important not to include service providers in the secondary sector. This means that a business such as a car wash is not part of the secondary sector because it does not produce a product itself but rather provides a service to other businesses or consumers. However, companies that recycle cars by turning them into scrap metal would be part of the secondary sector because they take one completed product (a car) and turn it into another one (metal).
The tertiary sector is also known as the “third” sector. This sector refers to a group of activities that are not concerned with manufacturing or producing goods. The primary focus in the tertiary sector is on services rather than products. The main aim is not on production but service for human beings. The output of this sector does not have any tangibility; therefore, it can’t be seen or touched, unlike primary and secondary sectors where the output can be seen and touched respectively. Examples of services include banking, insurance, financial services, education (training), healthcare (medical), transportation, travel and tourism etc.