According to the hypothesis about sectors of the economy, the main focus of an economy’s activity shifts from the primary sector, through the secondary sector and finally to the tertiary sector.
Jean Fourastié saw the process as essentially positive, and in ‘The Great Hope of the Twentieth Century’ he writes of the increase in quality of life, social security, blossoming of education and culture, higher level of qualifications, humanization of work, and avoidance of unemployment.
Let’s take a look at examples of business activity and workforce quotas in each of the three basic sectors of the economy.
First phase: Traditional civilizations
Countries with a low per capita income are in an early state of development; the main part of their national income is achieved through production in the primary sector.
Workforce quotas:
- Primary sector: 70%
- Secondary sector: 20%
- Tertiary sector: 10%
This phase represents a society which is scientifically not yet very developed, with a negligible use of machinery. The state of development corresponds to that of European countries in the early Middle Ages, or that of a modern-day developing country.
Second phase: Transitional period
Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector.
Workforce quotas:
- Primary sector: 20%
- Secondary sector: 50%
- Tertiary sector: 30%
More machinery is deployed in the primary sector, which reduces the number of workers needed. As a result, the demand for machinery production in the secondary sector increases. The transitional phase begins with an event which can be identified with industrialization: far-reaching mechanisation (and therefore automation) of manufacture, such as the use of conveyor belts.
The tertiary sector begins to develop, as do the financial sector and the power of the state.
Third phase: Tertiary civilization
In highly developed countries with a high income, the tertiary sector dominates the total output of the economy, according to the hypothesis.
Workforce quotas:
- Primary sector: 10%
- Secondary sector: 20%
- Tertiary sector: 70%
The primary and secondary sectors are increasingly dominated by automation, and the demand for workforce numbers falls in these sectors. It is replaced by the growing demands of the tertiary sector and de-industrialization. The situation now corresponds to modern-day industrial societies and the society of the future, the service or post-industrial society.
Today the tertiary sector has grown to such an enormous size that it is sometimes further divided into an information-based quaternary sector, and even a quinary sector based on non-profit services.
You can read more about quaternary sector and quinary sector of the economy in the article called Classification of Businesses – By Sectors of the Economy: Primary, Secondary, Tertiary, Quaternary and Quinary which I had published last year.
