3 sector models of economics

Written by ashley seehorn | 13/05/2017
3 sector models of economics
Agriculture is part of the primary economic sector. (agriculture image by Gonçalo Carreira from Fotolia.com)

The Three Sector Hypothesis of economics was based largely on the work of A. G. B. Fisher in 1933 and Colin Clark in 1940. The Fisher-Clark model of economics provides a description of the types of activities important in all societies. Fisher and Clark also described how the economy changes over time, and how this changes the activities of the society.

Primary Sector

The primary sector in an economy refers to the production or harvesting of natural resources. Activities of the primary sector include agriculture, fishery, mining, and forestry. The primary sector involves the use of physical space or the withdrawal of materials from physical space.

Secondary Sector

The secondary sector of an economy is the manufacturing sector. In this stage of production, natural resources are processed or refined for further use. Construction, baking, assembly, and other industries are part of the secondary sector, which uses products from the primary sector to create consumer goods.

Tertiary Sector

The tertiary sector involves services provided related to the other two sectors. Retail, banking, and sales are all part of the services sector. This sector doesn't involve production, but rather the support of production that occurs in the first and second sectors.

Quaternary and Quinary Sectors

Later theorists, such as Paul Hatt and Nelson Foote, included quaternary and quinary sectors to the economic model. These theorists felt the service or tertiary sector was overly large and should be divided up. The quaternary sector refers to intellectual- or information-related positions, so its activities include health care, education, government, and information technology. The quinary sector refers to top-level executives in any part of the service sector, including CEOs, high-level government officials, and education and health care administrators.

Fisher-Clark Hypothesis

Fisher and Clark stated that workers in pre-industrialised societies were predominantly involved in the primary sector, particularly in agriculture. As industrialisation occurs in a society, employment becomes concentrated in the manufacturing or secondary sector. In a post-industrial society, manufacturing becomes less important, and the service sector or tertiary sector gains prominence.

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