The 3 Sectors of Economic Activity

Business: Cambridge International GCSE (2027 Exams), topic 1.2.1

Economic Sectors

There are 3 main sectors in the economy:

The primary sector produces raw materials. These are natural resources that can be used to make products or provide services.
Natural resources can be:
Extracted from the ground like oil, coal and gas
Collected like trees in the forestry industry
Grown like crops in the farming/agriculture industry

The secondary sector manufactures goods
This is the next stage of the supply chain.
Businesses in this sector turn raw materials into finished goods.
E.g. A paper manufacturer makes paper out of wood collected by the forestry/logging industry.

As discussed previously these services can take a wide variety of forms and can exist to serve customers, businesses or a combination of both.
A simple example is the healthcare industry, which provides a wide range of healthcare services to people.
Another example is Facebook, which provides a social media service to customers while also providing an advertising service to businesses.

In developed economies, the tertiary sector grows as the economy becomes wealthier and demand for services rises.
In developing economies, the primary and secondary sectors are more important due to industrialisation and reliance on agriculture or manufacturing.
De-industrialisation in developed countries reduces the size of the secondary sector as manufacturing moves abroad or becomes automated.
Changes in technology, trade, and consumer demand also shift the relative importance of each sector.