Classification of Businesses
Types of Sectors
- Primary sectors – It involves the extraction of raw materials
- Secondary Sectors – It refers to the conversion of raw materials to semi-finished and/ or finished goods
- Tertiary sectors – It refers to the provision of services to households or businesses
Importance of Economic Sectors
- Proportion of workers in each sector – In poorer economies, most workers are in agriculture. As countries grow, employment shifts towards industry and eventually services.
- Output produced in each sector – The primary sector produces raw materials, the secondary adds value through manufacturing, and the tertiary generates the highest GDP in developed economies.
- Status and development – Sector development shows a country’s progress. Moving from farming to services reflects rising productivity and better living standards.
De-industrialisation
It is when a country reduces its level of economic activities in the secondary sectors.
Private sector vs public sector
The private sector refers to business that makes decisions about the allocation of resources that are owned and controlled by private individuals.
Whereas the public sector refers to a sector where the decisions about what, how, and for whom to produce are controlled by the government or state-owned organisations.
Mixed economy
It refers to an economy that is both owned and controlled by the private and public sectors.