What is the tertiary industry

Tertiary sector

The tertiary sector includes all businesses and freelancers who Services to offer. It is therefore all about those who do not produce any material goods. In economic statistics and studies in particular, this branch is distinguished from the primary (especially agriculture and forestry) and secondary economic sectors (industry).

Scope of the tertiary sector

The service sector is characterized by great diversity. He counts for example Commerce, transport, real estate rental, financial services and tourism. Economists also classify the public service, the health sector and social insurance as part of the tertiary sector. The range affects not only the industries, but also the size of the companies. In the tertiary sector there are many freelance people such as architects, lawyers and doctors, and it also includes large corporations such as banks and insurance companies with tens of thousands of employees.

Tertiarization of the national economy

In highly developed economies, a Tertiarization find that the tertiary sector became increasingly important. Today it contributes the largest share of the gross domestic product in Germany and in many other countries such as Great Britain, Japan and the USA and employs most of the people. In both statistical indicators, the tertiary sector has long overtaken the industrial sector. That is why the term service society came about in contrast to the industrial society or the agricultural society.

Effects of changed corporate strategies

With this trend, however, it should be noted that it is also largely based on outsourcing as a widespread business strategy. Industrial companies in particular have outsourced many services that they used to organize internally to third parties. This applies to activities such as customer care, logistics and advertising. If industrial companies carry out these tasks themselves, they count as part of the secondary sector in the economic calculation. If external service providers take on these activities, the economic parameters, on the other hand, appear in the tertiary sector. Example employment figures by economic sector in a city: An industrial company dismisses 1,000 customer service employees, a newly established call center with 1,000 employees takes care of it from now on. The number of employees in the secondary sector falls by 1,000, in the tertiary sector it increases by the same number.

Significance of the distinction

It is controversial to what extent the term tertiary sector makes sense in economic statistics. A high regional share of the service sector in the gross domestic product, for example, says nothing about the existing economic power. Cities like Frankfurt am Main and London have a high proportion because they have established themselves as the center of the financial sector with numerous large corporations with many well-paid employees. In other regions, on the other hand, the high proportion of services is based on companies with low-paid employees and low added value as well as a weak industrial sector.

Tertiary sector in summary:

  • Service sector
  • diverse industries and widely differing sizes of market participants
  • most important sector in strong economies
  • Growth is also based on the outsourcing of services
  • Meaningfulness controversial