Classification of Economic Activity

Economists refer to human activities that generate income as “economic activities.” Economic activities can be divided into three broad categories: primary, secondary, and tertiary activities. Higher services, which fall under the category of tertiary activities, are further subdivided into quaternary and quinary activities.

It will be easier to understand the differences between industries in different sectors of the economy if we first learn about the differences between industries in different sectors of the economy. This will make it easier for us to understand the factors that influence the location of primary, secondary, and tertiary sector industries in different parts of the world (including India).

Primary Sector

Products from the earth, such as raw materials and staple foods, are extracted or harvested by workers in the primary sector of the economy. Agriculture (both subsistence and commercial), mining, forestry, grazing, hunting and gathering, fishing, and quarrying are some of the activities associated with primary economic activity, as well as other related activities. Additionally, the packaging and processing of raw materials are regarded as being a part of this industry.

The primary sector employs a decreasing proportion of the workforce in both developed and developing countries. As of 2018, only about 1.8 percent of the labour force in the United States was employed in primary sector activity. This represents a significant decrease from 1880, when approximately half of the population worked in the agriculture and mining industries. People who work in primary activities are referred to as “red-collar workers” because their jobs require them to be outside most of the time.

Secondary Sector

The secondary sector of the economy is responsible for the production of finished goods from the raw materials extracted by the primary sector of the economic system. It is in this sector that all manufacturing, processing, and construction jobs are found. People who work in secondary activities are referred to as blue-collar employees.

Metalworking and smelting, automobile production, textile production, the chemical and engineering industries, aerospace manufacturing, energy utilities, breweries and bottlers, construction, and shipbuilding are all examples of activities associated with the secondary sector. When it comes to the United States, approximately 12.7 percent of the working population was involved in secondary sector activity in 2018.

Tertiary Sector

This sector of the economy is also referred to as the “service industry” or “service sector.” Sales of goods and services produced by the secondary sector are made to the general public as well as to businesses in all five economic sectors by the third sector.

This industry is comprised of a wide range of activities such as retail and wholesale sales; transportation and distribution; restaurants; clerical services; media; tourism; insurance; banking; health care; and the practise of law

Workers in the tertiary sector account for an increasing proportion of the workforce in both developed and developing countries. In the United States, tertiary workers account for approximately 61.9 percent of the labour force. Nonagricultural self-employed are classified as a separate category by the Bureau of Labour Statistics, and they account for another 5.6 percent of workers, though the sector in which they work is determined by their job.

Quaternary Sector

Quaternary activities are specialised tertiary activities in the ‘Knowledge Sector’ that require their own classification because they are so specialised. The demand for and consumption of information-based services has increased dramatically in recent years, affecting everyone from mutual fund managers to tax consultants, software developers, and statisticians. Personnel employed in office buildings, elementary schools and university classrooms, hospitals and doctors’ offices, theatres, accounting and brokerage firms, and other similar establishments fall under this category of services. The same way that some tertiary functions can be outsourced, quaternary activities can be done as well. They are not reliant on resources, are not affected by the environment, and are not necessarily restricted to a specific geographical area.

Quinary Sector 

Services that are centred on the creation, re-arrangement, and interpretation of new and existing ideas, data interpretation, as well as the use and evaluation of new technologies, are classified as quinary activities. They are sometimes referred to as “gold collar” professions because they represent another subdivision of the tertiary sector that represents the specialised and highly compensated skills of senior business executives, government officials, research scientists, financial and legal consultants, and other professionals, among other things. Their significance in the structure of advanced economies outweighs the fact that they are few in number. Quinary activities are carried out by decision-makers or policymakers at the highest level of authority.

A further subdivision of the quaternary sector is the quinary sector, which includes the highest levels of decision-making in a society or an economy, according to some economists. Among those working in this sector are top executives or officials from industries such as government, science, universities, nonprofit organisations, health care, culture, and the media. It may also include police and fire departments, which are considered public services rather than for-profit enterprises, in the definition.

Domestic activities (i.e., duties performed at home by a family member or dependent) are sometimes included in the quinary sector, according to some economists. The economic impact of these activities, such as child care and housekeeping, is typically not quantifiable in monetary terms, but they contribute to the economy by providing free services that would otherwise be charged for. Employees in the quinary sector account for approximately 13.9 percent of all workers in the United States. Quinary professions are those with gold collars.

Conclusion

Economists refer to human activities that generate income as “economic activities.” Economic activities can be divided into three broad categories: primary, secondary, and tertiary activities. Higher services, which fall under the category of tertiary activities, are further subdivided into quaternary and quinary activities. The secondary sector of the economy is responsible for the production of finished goods from the raw materials extracted by the primary sector of the economic system. Tertiary sector of the economy is also referred to as the “service industry” or “service sector.” Quaternary activities are specialised tertiary activities in the ‘Knowledge Sector’ that require their own classification because they are so specialised. Services that are centred on the creation, re-arrangement, and interpretation of new and existing ideas, data interpretation, as well as the use and evaluation of new technologies, are classified as quinary activities.