The classification of business activity by sectors of the economy is not used to define a country as a developing or a developed nation. However, the size of a country’s different sectors of business activity often indicates, if it has a developing or a developed economy. Conclusively, we use this classification as to better understand the situation/status/stage of the economy of a particular country, rather than to judge whether this country is rich or poor.
We know that countries can be described either as less-developed, developing or developed. Less developed countries and developing countries have a small industrial sector and lower standard of living compared to developed countries. A developed country has high levels of industrialization, its people have higher average incomes and most of the citizens enjoy a higher standard of living compared to less developed countries.
Although an economy can be divided into primary, secondary, tertiary and quaternary sectors, the different sectors of business activity are often interdependent upon each other as one provides the resources required by another. This is known as a chain of production.
The four business sectors are linked through the chain of production which tracks the stages of a product’s production process – starting from the extraction of raw materials used to make the product all the way through to the product being delivered to the final consumers, either individuals or corporate clients.
Let’s look at gold as an example.
Gold is extracted from underground and gold extraction is a business activity of the primary sector. Once it has been extracted, gold needs to be cleaned thoroughly and melted in very high temperature to produce other products such as gold bars or jewelry like golden earrings or necklaces. This is a process carried out by businesses in the secondary sector. Finally, tertiary sector activity is needed to bring various gold products to your nearest jewelry shop for sale to the final consumer.
Currently globally, multi-national tertiary businesses are growing.
