HOME

TheInfoList




The tertiary sector of the economy, generally known as the service sector, is the third of the three
economic sector Image:Economic sectors and income.JPG, 250px, Percentages of a country's economy made up by different sectors. Countries with higher levels of socio-economic development tend to have proportionally less of their economies operating in the primary a ...
s of the
three-sector theory The three-sector model in economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (econom ...
, (also known as the economic cycle). The others are the
secondary sector In macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics Economics () is the social science that studies how people interact with value; in particular, the Production ...
(approximately the same as
manufacturing Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity), labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector ...
), and the
primary sector The primary sector of the economy includes any industry Industry may refer to: Economics * Industry (economics) In macroeconomics, an industry is a branch of an economy that produces a closely related set of raw materials, goods, or se ...
(
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 Product (business), products, energy, or intermediate materials that are feedstock for future finis ...
s). The service sector consists of the production of
services Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administrative service, a required part of the workload of Faculty (academic staff), university faculty * Civil service, the body of employees of a governm ...
instead of end products. Services (also known as "intangible goods") include attention, advice, access, experience, and
affective labor Affective labor is work carried out that is intended to produce or modify emotional experiences in people. This is in contrast to emotional labor Emotional labor is the process of managing feelings and expressions to fulfill the emotional requir ...
. The production of information has been long regarded as a service, but some economists now attribute it to a fourth sector, the
quaternary sectorThe quaternary sector of the economy is based upon the economic activity that is associated with either the intellectual or knowledge-based economy . This consists of information technology; media Media may refer to: Physical means Communi ...
. The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the
transport Transport (in British English British English (BrE) is the standard dialect A standard language (also standard variety, standard dialect, and standard) is a language variety that has undergone substantial codification of grammar and ...

transport
,
distributionDistribution may refer to: Mathematics *Distribution (mathematics) Distributions, also known as Schwartz distributions or generalized functions, are objects that generalize the classical notion of functions in mathematical analysis. Distr ...
and sale of goods from producer to a consumer, as may happen in
wholesaling Wholesaling or distributing is the sale of goods or merchandise Merchandising is any practice which contributes to the sale of products to a retail consumer A consumer is a person or a group who intends to order, orders, or uses purchased ...
and
retailing Retail is the sale of goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption ( ...
,
pest control Pest control is the regulation or management of a species In biology, a species is the basic unit of biological classification, classification and a taxonomic rank of an organism, as well as a unit of biodiversity. A species is often def ...
or
entertainment Entertainment is a form of activity that holds the attention and interest In finance Finance is the study of financial institutions, financial markets and how they operate within the financial system. It is concerned with the creatio ...

entertainment
. The goods may be transformed in the process of providing the service, as happens in the
restaurant A restaurant is a business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." ...

restaurant
industry. However, the focus is on people by interacting with people and serving the customer rather than transforming the physical goods.


Difficulty of definition

It is sometimes hard to define whether a given company is part and parcel of the secondary or tertiary sector. And it is not only companies that have been classified as part of that sector in some schemes; government and its services such as police or military, and non-profit organizations such as charities and research associations can also be seen as part of that sector. In order to classify a business as a service, one can use classification systems such as the
United Nations The United Nations (UN) is an intergovernmental organization aiming to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be a centre for harm ...

United Nations
'
International Standard Industrial ClassificationThe International Standard Industrial Classification of All Economic Activities (ISIC) is a United Nations The United Nations (UN) is an intergovernmental organization that aims to maintain international peace and international security, secu ...
standard, the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States
'
Standard Industrial Classification Standard may refer to: Symbols * Colours, standards and guidons In military organizations, the practice of carrying colours, standards or guidons, both to act as a rallying point for troops and to mark the location of the commander, is ...
(SIC) code system and its new replacement, the
North American Industrial Classification System The North American Industry Classification System or NAICS () is a classification of business establishments by type of economic activity (process of production). It is used by government and business in Canada Canada is a country in the ...
(NAICS), the
Statistical Classification of Economic Activities in the European Community The Statistical Classification of Economic Activities in the European Community, commonly referred to as NACE (for the French term ''"nomenclature statistique des activités économiques dans la Communauté européenne"''), is the industry standard ...
(NACE) in the EU and similar systems elsewhere. These governmental classification systems have a first-level of hierarchy that reflects whether the economic goods are tangible or intangible. For purposes of
finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contrasted with the beggar whose legs and arms were amputated, in the left corn ...

finance
and
market research Market research is an organized effort to gather information about target markets A target market is a group of customers within a business Business is the activity of making one's living or making money by producing or buying and selling ...

market research
,
market Market may refer to: *Market (economics) *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an island shared by Finland and Sweden Art, entertainment, and media Films *Market (1965 film), ''Market'' (1965 ...
-based classification systems such as the
Global Industry Classification Standard The Global Industry Classification Standard (GICS) is an industry taxonomy Industry classification or industry taxonomy is a type of economic taxonomy that classifies companies, organizations and traders into Industry (economics), industrial groupi ...
and the
Industry Classification Benchmark The Industry Classification Benchmark (ICB) is an industry classification Industry classification or industry taxonomy is a type of economic taxonomy An economic taxonomy is a system of classification of economic activity, including products, compa ...
are used to classify businesses that participate in the service sector. Unlike governmental classification systems, the first level of market-based classification systems divides the economy into functionally related markets or industries. The second or third level of these hierarchies then reflects whether goods or services are produced.


Theory of progression

For the last 100 years, there has been a substantial shift from the primary and secondary sectors to the tertiary sector in industrialized countries. This shift is called tertiarisation.Definition by the European Foundation for the Improvement of Living and Working Conditions
The tertiary sector is now the largest sector of the economy in the
Western world The Western world, also known as the West, refers to various regions, nations and state (polity), states, depending on the context, most often consisting of the majority of Europe, Northern America, and Australasia.
, and is also the fastest-growing sector. In examining the growth of the service sector in the early Nineties, the globalist
Kenichi Ohmae is a Japanese organizational theorist Organizational theory consists of many approaches to organizational analysis. Organization An organization, or organisation ( Commonwealth English; see spelling differences), is an entity – su ...
noted that: Economies tend to follow a developmental progression that takes them from a heavy reliance on agriculture and mining, toward the development of
manufacturing Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity), labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector ...
(e.g. automobiles, textiles, shipbuilding, steel) and finally toward a more service-based structure. The first economy to follow this path in the modern world was the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain,Usage is mixed. The Guardian' and Telegraph' use Britain as a synonym for the United Kingdom. Some prefer to use Britain as shorth ...

United Kingdom
. The speed at which other economies have made the transition to service-based (or "
post-industrial In sociology Sociology is the study of society, human social behaviour, patterns of social relationships, social interaction, and culture that surrounds everyday life. It is a social science that uses various methods of Empirical method, e ...
") economies has increased over time. Historically, manufacturing tended to be more open to
international trade International trade is the exchange of capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscul ...
and competition than services. However, with dramatic cost reduction and speed and reliability improvements in the transportation of people and the communication of information, the service sector now includes some of the most intensive international competition, despite residual
protectionism Protectionism is the economic policy of restricting imports from other countries through methods such as tariffs on imported goods, import quotas, and a variety of other government regulations. Proponents argue that protectionist policies sh ...
.


Issues for service providers

Service providers face obstacles selling services that goods-sellers rarely face. Services are intangible, making it difficult for potential customers to understand what they will receive and what value it will hold for them. Indeed, some, such as
consultants A consultant (from la, consultare "to deliberate") is a professional A professional is a member of a profession or any person who earns their living from a specified professional activity. The term also describes the standards of education and ...
and providers of
investment Investment is the dedication of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort. In finance Finance is the study of financial institution ...

investment
services, offer no guarantees of the value for price paid. Since the quality of most services depends largely on the quality of the individuals providing the services, "people costs" are usually a high fraction of service costs. Whereas a manufacturer may use technology, simplification, and other techniques to lower the cost of goods sold, the service provider often faces an unrelenting pattern of increasing costs.
Product differentiation In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
is often difficult. For example, how does one choose one
investment adviser A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory b ...
over another, since they are often seen to provide identical services? Charging a premium for services is usually an option only for the most established firms, who charge extra based upon
brand recognition Brand awareness is the extent to which customers are able to recall or recognize a brand A brand is a name, term, design, symbol or any other feature that identifies one seller's good or service as distinct from those of other sellers. Brands ...
.


Examples of tertiary sector industries

Examples of tertiary industries may include: *
Telecommunication Telecommunication is the transmission of information by various types of technologies over wire A wire is a single usually cylindrical A cylinder (from Greek Greek may refer to: Greece Anything of, from, or related to Greece Gr ...
*
Hospitality industry The hospitality industry is a broad industry (economics), category of fields within the service industry that includes lodging, food service, food and drinking establishment, drink service, event planning, theme parks, travel and tourism. It includ ...
/
tourism Tourism is travel Travel is the movement of people between distant geographical location In geography Geography (from Greek: , ''geographia'', literally "earth description") is a field of science devoted to the study of th ...

tourism
*
Mass media Mass media refers to a diverse array of media Media may refer to: Physical means Communication * Media (communication), tools used to deliver information or data ** Advertising media, various media, content, buying and placement fo ...
*
Healthcare Healthcare is the maintenance or improvement of health Health, according to the , is "a state of complete physical, and social and not merely the absence of and ".. (2006)''Constitution of the World Health Organization''– ''Basic Docume ...

Healthcare
/
hospitals A hospital is a health care Health care, health-care, or healthcare is the maintenance or improvement of health via the preventive healthcare, prevention, diagnosis, therapy, treatment, recovery, or cure of disease, illness, injury, and othe ...

hospitals
*
Public health Public health has been defined as "the science and art of preventing disease", prolonging life and improving quality of life Quality of life (QOL) is defined by the World Health Organization The World Health Organization (WHO) is a s ...

Public health
*
Pharmacy Pharmacy is the clinical health science The following Outline (list), outline is provided as an overview of and topical guide to health sciences: Health sciences – are those sciences which focus on health, or health care, as core p ...

Pharmacy
* Information technology *
Waste disposal Waste management (or waste disposal) includes the processes and actions required to manage waste Waste (or wastes) are unwanted or unusable materials. Waste is any substance which is discarded after primary use, or is worthles ...

Waste disposal
*
Consulting A consultant (from la, consultare "to deliberate") is a professional A professional is a member of a profession or any person who earns their living from a specified professional activity. The term also describes the standards of education and ...

Consulting
*
Gambling Gambling (also known as betting) is the wagering something of Value (economics), value ("the stakes") on an Event (probability theory), event with an uncertain outcome with the intent of winning something else of value. Gambling thus requires ...
*
Retail Retail is the sale of goods In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption ( ...

Retail
sales **
Fast-moving consumer goods Fast-moving consumer goods (FMCG), also known as consumer packaged goods (CPG), are products that are sold quickly and at a relatively low cost. Examples include non-durable household goodsHousehold goods are goods and products used within ...
(FMCG) *
Franchising Franchising is based on a marketing Marketing is the process of intentionally stimulating demand for and purchases of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to e ...
*
Real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more genera ...

Real estate
*
Education Education is the process of facilitating learning, or the acquisition of knowledge, skills, value (ethics), values, morals, beliefs, habits, and personal development. Educational methods include teaching, training, storytelling, discussion ...

Education
*
Financial services Financial services are the economic services provided by the finance Finance is a term for the management, creation, and study of money In a 1786 James Gillray caricature, the plentiful money bags handed to King George III are contra ...
**
Banking A bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), stat ...

Banking
**
Insurance Insurance is a means of protection from financial loss. It is a form of risk management Risk management is the identification, evaluation, and prioritization of risk In simple terms, risk is the possibility of something bad happening. ...

Insurance
**
Investment management Investment management is the professional asset management Asset management refers to a systematic approach to the governance and realization of value from the things that a group or entity is responsible for, over their whole life cycles. It ...
*
Professional services Professional services are occupations in the service sector The tertiary sector of the economy, generally known as the service sector, is the third of the three economic sector Image:Economic sectors and income.JPG, 250px, This figure illustr ...
**
Legal services In its most general sense, the practice of law involves giving legal advice to clients, drafting legal documents for clients, and representing clients in legal negotiation Negotiation is a dialogue between two or more people or parti ...
**
Management consulting Management consulting is the practice of helping organization An organization, or organisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), ...
*
Transportation Transport (in British English British English (BrE) is the standard dialect A standard language (also standard variety, standard dialect, and standard) is a language variety that has undergone substantial codification of grammar and ...

Transportation


List of countries by tertiary output

Below is a list of countries by service output at market exchange rates in 2016:


See also

*
Economic sector Image:Economic sectors and income.JPG, 250px, Percentages of a country's economy made up by different sectors. Countries with higher levels of socio-economic development tend to have proportionally less of their economies operating in the primary a ...
*
Indigo Era The Indigo Era, or Indigo economies, is a concept first publicized in early 2016 by international businessman Mikhail Fridman Mikhail Maratovich Fridman (also transliterated Mikhail Friedman; russian: Михаи́л Мара́тович Фри́ ...
*
Post-industrial society In sociology Sociology is a social science Social science is the branch The branches and leaves of a tree. A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phyt ...
*
Quaternary sector of the economyThe quaternary sector of the economy is based upon the economic activity that is associated with either the intellectual or knowledge-based economy . This consists of information technology; media; research and development; information-based serv ...
*
Voluntary sector The voluntary sector, independent sector, or civic sector is the duty of social activity undertaken by organization An organization, or organisation ( Commonwealth English; see spelling differences), is an entity – such as a company, a ...


References


External links

* {{DEFAULTSORT:Tertiary Sector Of The Economy +3 de:Wirtschaftssektor#Terti.C3.A4rsektor_.28Dienstleistungssektor.29