Comparing the three sectors

Basis 

Primary Sector

Secondary Sector

Tertiary Sector

Meaning

It includes all the activities in which natural resources are exploited to produce a good.

It includes all the activities in which natural resources are converted into other useful forms by using a process known as manufacturing.

This sector does not involve the production of goods rather it includes all the activities which enable a channel from which these goods reach from one user to another.

Importance

This sector has been the most important since the beginning of civilization.

This sector gained its due importance after the industrial revolution.

This sector is the one which has gained significance recently like over the last decade.

Other names

This sector is also known as the agricultural sector.

This sector is also known as the industrial sector.

This sector is also known as the service sector.

Example

Farming, Fishing, Dairy, Mining etc.

Converting milk and sugar into ice cream ; cotton into clothes

Transportation, warehousing, banking

 

Interdependence between the sectors

All the sectors, primary, secondary and tertiary , are linked or interconnected with each other.

This can be illustrated with the help of an example -

  1. For the growth of the cotton plant, we depend mainly, but not entirely, on natural factors like rainfall, sunshine, and climate. The product of this activity , cotton , is a natural product. This forms the base of products made from it i.e primary activity.

  2. The produc t is not produced by nature but has to be made and therefore some process of manufacturing is essential. This could be in a factory, a workshop, or at home. This next step might involve using cotton fiber from the plant, we spin yarn, and weaving cloth. The cloth goes through the manufacturing of shirts i.e. secondary activity dependent on primary activity.

  3. Now, these shirts that are produced in the primary or secondary sector would need to be transported by trucks or trains and then sold in wholesale and retail shops . Transport, storage, communication, banking, trade, etc. would constitute the distribution of the final product to the consumer in the market i.e. dependence of tertiary activity on secondary activity to supply finished goods to sell. 

Gross Domestic Product (GDP)

  • GDP is the value of all the final goods and services produced within a financial year.  
  • It is calculated by using the formula which is Total GDP = GDP of Primary + GDP of Secondary + GDP of Tertiary.
  • In India , a central government ministry is responsible for estimating the GDP.
  • with the help of various government departments of all the Indian states and union territories, it collects information relating to the total volume of goods and services and their prices and then estimates the GDP.

Historical Changes in the Sectors

Changes in the Sectors of economic activities 

  • Primary sector, as it has been noted, was the only important sector when we look back into the past. In the initial stages of economic development, this sector was the only one with significance.
  • As the f arming methods changed and the agriculture sector began to prosper, its production capacity increased which opened gateways for people to engage in many other activities. There were an increasing number of craft persons and traders and also the buying and selling activities increased.
  • When new methods of manufacturing came into the market , people started setting up factories and expanding them . These big factories also started to generate a lot of employment as their maintenance and operations required a large workforce. This increased the significance of the Secondary sector and it became the most important sector.
  • And now in the last 100 years, there has been a further shift from the secondary sector to the tertiary sector in developed countries. The Tertiary sector which is also known as the service sector has started to engage a lot of people in it and it has become the most important sector in terms of total production.
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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.