Three-sector model

Industrial output in 2005
Service output in 2005

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 of goods produced in the secondary sector (tertiary).[1] The model was developed by Allan Fisher,[2][3][4] Colin Clark,[5] and Jean Fourastié[6] in the first half of the 20th century, and is a representation of an industrial economy. It has been criticised as inappropriate as a representation of the economy in the 21st century.[7]

According to the three-sector model, the main focus of an economy's activity shifts from the primary through the secondary and finally to the tertiary sector. Countries with a low per capita income are in an early state of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy.

The rise of the post-industrial economy in which an increasing proportion of economic activity is not directly related to physical goods has led some economists to expand the model by adding a fourth quaternary or fifth quinary sectors, while others have ceased to use the model.

  1. ^ Kjeldsen-Kragh, Søren (2007). The Role of Agriculture in Economic Development: The Lessons of History. Copenhagen Business School Press DK. p. 73. ISBN 978-87-630-0194-6.
  2. ^ Fisher, Allan G. B. (1935). The Clash of Progress and Security. London: Macmillan. Archived from the original on 2019-07-13. Retrieved 2019-07-13.
  3. ^ Fisher, Allan G. B. (1939). "Production, primary, secondary and tertiary". Economic Record. 15 (1): 24–38. doi:10.1111/j.1475-4932.1939.tb01015.x. ISSN 1475-4932.
  4. ^ Fisher, Allan G. B. (1946). Economic Progress And Social Security. London: Macmillan. Retrieved 2019-07-14.
  5. ^ Colin Clark (1940). The Conditions of Economic Progress. London: Macmillan. Retrieved 2019-07-13.
  6. ^ Fourastié, Jean (1949). Le grand espoir du XXe siècle: Progrès technique, progrès économique, progrès social (in French). Paris: Presses universitaires de France.
  7. ^ Schafran, Alex; McDonald, Conor; López-Morales, Ernesto; Akyelken, Nihan; Acuto, Michele (2018). "Replacing the services sector and three-sector theory: urbanization and control as economic sectors". Regional Studies. 52 (12): 1708–1719. Bibcode:2018RegSt..52.1708S. doi:10.1080/00343404.2018.1464136. S2CID 158415916. Archived from the original on 2022-08-10. Retrieved 2021-01-01.

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