Sectors of Economy

The economy is the realized social system of production, exchange, distribution, and consumption of goods and services of a country or other area. An economy can mean the economy of a city (local economy), a country (national economy) or the world as a whole (international economy), provided that it is involved in the production of goods and services.

All kind of professions, occupations, economic agents or economic activities, contribute to the economy.

• The ancient economy was mainly based on subsistence farming.

• The industrial revolution lessened the role of subsistence farming, converting it to more extensive and monocultural forms of agriculture in the last three centuries. The economic growth took place mostly in mining, construction and manufacturing industries.
• In modern economies of societies there is a growing part played by services, finance, and technology - the (knowledge economy). The knowledge economy is a term that refers to the use of knowledge technologies (such as knowledge engineering and knowledge management) to produce economic benefits. The phrase was popularized if not invented by Peter Drucker as the title of Chapter 12 in his book The Age of Discontinuity.

The economy may be classified into subdivisions called sectors (also called industries) in several ways.

1. When classified based on the stage in the production chain, there are three four broad sectors in modern economies:

· The primary sector of the economy involves changing natural resources into primary products. Most products from this sector are considered raw materials for other industries. Major businesses in this sector include agriculture, agribusiness, fishing, forestry and all mining and quarrying industries. Primary industry is a larger sector in developing countries; for instance, animal husbandry is more common in Africa than in Japan.

· Secondary sector of the economy: Involves the transformation of raw or intermediate materials into goods e.g. manufacturing steel into cars, or textiles into clothing. (A builder and a dressmaker would be workers in the secondary sector). This sector generally takes the output of the primary sector and manufactures finished goods or where they are suitable for use by other businesses, for export, or sale to domestic consumers. This sector is often divided into light industry and heavy industry. Many of these industries consume large quantities of energy and require factories and machinery to convert the raw materials into goods and products. They also produce waste materials and waste heat that may pose environmental problems or cause pollution.

· The tertiary sector of economy involves the provision of services to businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer. Goods may be transformed in the process of providing a service, as happens in the restaurant industry or in equipment repair. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods.

The service sector consists of the "soft" parts of the economy such as insurance, government, tourism, banking, retail, education, and social services. In soft-sector employment, people use time to deploy knowledge assets to create productivity (effectiveness). The tertiary sector is the most common workplace.

Typically the output of this sector is content (information), service, attention, advice, experiences, and/or discussion (also known as "intangible goods").

· Quaternary sector of the economy: Involves the research and development needed to produce products from natural resources. (A logging company might research ways to use partially burnt wood to be processed so that the undamaged portions of it can be made into pulp for paper.) Note that education is sometimes included in this sector.

2. Based on ownership, the economy may be subdivided into:

• Public sector
• Private sector
• Voluntary sector

The public sector is the part of economic and administrative life that deals with the delivery of goods and services by and for the government, whether national, regional or local/municipal.

Examples of public sector activity range from delivering social security, administering urban planning and organising national defenses.

In economics, the private sector is that part of the economy which is both run for private profit and is not controlled by the state. The private sector focuses on the needs of the shareholders and employs the majority of the workforce in some countries. However, in some countries such as the People's Republic of China, the public sector employs most of the workers.

Voluntary sector (also non-profit sector) is the sphere of social activity undertaken by organizations that are non-profit and non-governmental. This sector is also called the third sector, in reference to the public sector and the private sector.

Based on the type of product produced, the economy may be subdivided into:

Дата добавления: 2015-10-29