macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...

, the secondary sector of the economy is an

economic sector One classical breakdown of economic activity distinguishes three sectors: * Primary: involves the retrieval and production of raw-material commodities, such as corn, coal, wood or iron. Miners, farmers and fishermen are all workers in the ...

in the

three-sector theory The three-sector model in economics divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and service industries which exist to facilitate the transport, distribution and sale o ...

that describes the role of

manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to a r ...

. It encompasses industries that

produce Produce is a generalized term for many farm-produced crops, including fruits and vegetables (grains, oats, etc. are also sometimes considered ''produce''). More specifically, the term ''produce'' often implies that the products are fresh and g ...

a finished, usable

product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Produ ...

or are involved in

construction Construction is a general term meaning the art and science to form objects, systems, or organizations,"Construction" def. 1.a. 1.b. and 1.c. ''Oxford English Dictionary'' Second Edition on CD-ROM (v. 4.0) Oxford University Press 2009 and com ...

. This sector generally takes the output of the

primary sector The primary sector of the economy includes any industry involved in the extraction and production of raw materials, such as farming, logging, fishing, forestry and mining. The primary sector tends to make up a larger portion of the economy in de ...

(i.e.

raw material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished goods, energy, or intermediate materials that are feedstock for future finished products. As feedst ...

s) and creates

finished goods Finished goods are goods that have completed the manufacturing process but have not yet been sold or distributed to the end user. Manufacturing Manufacturing has three classes of inventory: # Raw material # Work in process # Finished goods ...

suitable for sale to domestic

business Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for pr ...

es or

consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. T ...

s and for

export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is an ...

(via distribution through the

tertiary sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sectors in the three-sector model (also known as the economic cycle). The others are the primary sector (raw materials) and the second ...

). Many of these industries consume large quantities of energy, require

factories A factory, manufacturing plant or a production plant is an industrial facility, often a complex consisting of several buildings filled with machinery, where workers manufacture items or operate machines which process each item into another. T ...

and use machinery; they are often classified as

light Light or visible light is electromagnetic radiation that can be perceived by the human eye. Visible light is usually defined as having wavelengths in the range of 400–700 nanometres (nm), corresponding to frequencies of 750–420 tera ...

heavy Heavy may refer to: Measures * Heavy (aeronautics), a term used by pilots and air traffic controllers to refer to aircraft capable of 300,000 lbs or more takeoff weight * Heavy, a characterization of objects with substantial weight * Heavy, ...

based on such quantities. This also produces

waste Waste (or wastes) are unwanted or unusable materials. Waste is any substance discarded after primary use, or is worthless, defective and of no use. A by-product, by contrast is a joint product of relatively minor economic value. A waste prod ...

materials and

waste heat Waste heat is heat that is produced by a machine, or other process that uses energy, as a byproduct of doing work. All such processes give off some waste heat as a fundamental result of the laws of thermodynamics. Waste heat has lower utility ...

that may cause environmental problems or

pollution Pollution is the introduction of contaminants into the natural environment that cause adverse change. Pollution can take the form of any substance (solid, liquid, or gas) or energy (such as radioactivity, heat, sound, or light). Pollutants, the ...

(see

negative externalities In economics, an externality or external cost is an indirect cost or benefit to an uninvolved third party that arises as an effect of another party's (or parties') activity. Externalities can be considered as unpriced goods involved in either co ...

). Examples include textile production,

car manufacturing The automotive industry comprises a wide range of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles. It is one of the world's largest industries by revenue (from 16 % such a ...

, and

handicraft A handicraft, sometimes more precisely expressed as artisanal handicraft or handmade, is any of a wide variety of types of work where useful and decorative objects are made completely by one’s hand or by using only simple, non-automated re ...

. Manufacturing is an important activity in promoting

economic growth Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate of ...

and

development Development or developing may refer to: Arts *Development hell, when a project is stuck in development *Filmmaking, development phase, including finance and budgeting *Development (music), the process thematic material is reshaped * Photograph ...

. Nations that export manufactured products tend to generate higher marginal

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

growth, which supports higher

income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For ...

s and therefore marginal

tax revenue Tax revenue is the income that is collected by governments through taxation. Taxation is the primary source of government revenue. Revenue may be extracted from sources such as individuals, public enterprises, trade, royalties on natural resou ...

needed to fund such government expenditures as

health care Health care or healthcare is the improvement of health via the prevention, diagnosis, treatment, amelioration or cure of disease, illness, injury, and other physical and mental impairments in people. Health care is delivered by health profe ...

and

infrastructure Infrastructure is the set of facilities and systems that serve a country, city, or other area, and encompasses the services and facilities necessary for its economy, households and firms to function. Infrastructure is composed of public and priv ...

. Among

developed countries A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...

, it is an important source of well-paying jobs for the

middle class The middle class refers to a class of people in the middle of a social hierarchy, often defined by occupation, income, education, or social status. The term has historically been associated with modernity, capitalism and political debate. Commo ...

(e.g., engineering) to facilitate greater

social mobility Social mobility is the movement of individuals, families, households or other categories of people within or between social strata in a society. It is a change in social status relative to one's current social location within a given society ...

for successive generations on the economy. Currently, an estimated 20% of the

labor force The workforce or labour force is a concept referring to the pool of human beings either in employment or in unemployment. It is generally used to describe those working for a single company or industry, but can also apply to a geographic regio ...

in the United States is involved in the secondary industry. The secondary sector depends on the primary sector for the raw materials necessary for production. Countries that primarily produce

agricultural Agriculture or farming is the practice of cultivating Plant, plants and livestock. Agriculture was the key development in the rise of Sedentism, sedentary human civilization, whereby farming of Domestication, domesticated species created food ...

and other raw materials (i.e., primary sector) tend to grow slowly and remain either

under-developed Underdevelopment, in the context of international development, reflects a broad condition or phenomena defined and critiqued by theorists in fields such as economics, development studies, and postcolonial studies. Used primarily to distinguish st ...

developing economies A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreeme ...

. The value added through the transformation of raw materials into finished goods reliably generates greater

profitability In economics, profit is the difference between the revenue that an economic entity has received from its outputs and the total cost of its inputs. It is equal to total revenue minus total cost, including both explicit and implicit costs. It i ...

, which underlies the faster growth of developed economies.

References

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