The 5 Sectors of the Economy

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A nation’s economy can be divided into sectors to define the proportion of a population engaged in different activities. This categorization represents a continuum of distance from the natural environment. The continuum starts with primary economic activity, which concerns itself with the utilization of raw materials from the earth, such as agriculture and mining. From there, the distance from natural resources increases as sectors become more detached from the processing of raw materials.

Primary Sector

The primary sector of the economy extracts or harvests products from the earth such as raw materials and basic foods. Activities associated with primary economic activity include agriculture (both subsistence and commercial), mining, forestry, grazing, hunting and gathering, fishing, and quarrying. The packaging and processing of raw materials are also considered to be part of this sector.

In developed and developing countries, a decreasing proportion of workers is involved in the primary sector. Only about 1.8% of the U.S. labor force was engaged in primary sector activity as of 2018. This is a dramatic decrease from 1880 when roughly half of the population worked in the agriculture and mining industries.

Secondary Sector

The secondary sector of the economy produces finished goods from the raw materials extracted by the primary economy. All manufacturing, processing, and construction jobs lie within this sector.

Activities associated with the secondary sector include metalworking and smelting, automobile production, textile production, the chemical and engineering industries, aerospace manufacturing, energy utilities, breweries and bottlers, construction, and shipbuilding. In the United States, around 12.7% of the working population was engaged in secondary sector activity in 2018.

Tertiary Sector

The tertiary sector of the economy is also known as the service industry. This sector sells the goods produced by the secondary sector and provides commercial services to both the general population and to businesses in all five economic sectors.

Activities associated with this sector include retail and wholesale sales, transportation and distribution, restaurants, clerical services, media, tourism, insurance, banking, health care, and law.

In most developed and developing countries, a growing proportion of workers is devoted to the tertiary sector. In the United States, about 61.9% of the labor force is tertiary workers. The Bureau of Labor Statistics puts nonagriculture self-employed into its own category, and that accounts for another 5.6% of workers, though the sector for these people would be determined by their job.

Quaternary Sector

Although many economic models divide the economy into only three sectors, others divide it into four or even five. These two sectors are closely linked with the services of the tertiary sector, which is why they can also be grouped into this branch. The fourth sector of the economy, the quaternary sector, consists of intellectual activities often associated with technological innovation. It is sometimes called the knowledge economy. 

Activities associated with this sector include government, culture, libraries, scientific research, education, and information technology. These intellectual services and activities are what drive technological advancement, which can have a huge impact on short- and long-term economic growth. Roughly 4.1% of U.S. workers are employed in the quaternary sector.

Quinary Sector

Some economists further narrow the quaternary sector into the quinary sector, which includes the highest levels of decision-making in a society or economy. This sector includes top executives or officials in such fields as government, science, universities, nonprofits, health care, culture, and the media. It may also include police and fire departments, which are public services as opposed to for-profit enterprises.

Economists sometimes also include domestic activities (duties performed in the home by a family member or dependent) in the quinary sector. These activities, such as child care or housekeeping, are typically not measured by monetary amounts but contribute to the economy by providing services for free that would otherwise be paid for. An estimated 13.9% of U.S. workers are quinary sector employees.

View Article Sources
  1. “Employment by Major Industry Sector.” Employment Projections, U.S. Bureau of Labor Statistics, 4 Sept. 2019.

  2. Hirschman, Charles, and Elizabeth Mogford. “Immigration and the American Industrial Revolution From 1880 to 1920.” Social Science Research, vol. 38, no. 4, pp. 897–920, Dec. 2009, doi:10.1016/j.ssresearch.2009.04.001