Changing Economies » Industry Classification

What you'll learn this session

Study time: 30 minutes

The four sectors of economic activity and their characteristics
How economies change as countries develop
Employment structure diagrams and what they tell us
Examples of industry classification in different countries
How to analyse changes in employment structure

Industry Classification: Understanding Economic Sectors

As countries develop, the types of jobs people do change dramatically. Understanding how industries are classified helps us make sense of these changes and predict future economic patterns. This guide explores how economic activities are grouped into sectors and what this means for countries at different stages of development.

Key Definitions:

Industry Classification: The system of categorising economic activities into different sectors based on the type of work being done.
Employment Structure: The distribution of a country's workforce across different economic sectors.
Economic Development: The process by which a country improves the economic, political and social well-being of its people.

📈 Why Classify Industries?

Classifying industries helps us to:

Compare economies around the world
Track how countries change over time
Understand the relationship between development and types of jobs
Plan for future economic needs and opportunities

📝 Clark-Fisher Model

This model, developed by Colin Clark and Allan Fisher in the 1930s and 40s, shows how economies typically move through stages of development, with different sectors dominating at each stage. As countries develop, they generally shift from primary to secondary to tertiary and eventually quaternary activities.

The Four Sectors of Economic Activity

Primary Sector

The primary sector involves extracting and harvesting natural resources directly from the earth. These activities form the foundation of the economic supply chain.

🌱 Primary Activities

Agriculture (farming, livestock)
Fishing and aquaculture
Forestry and logging
Mining and quarrying
Oil and gas extraction

📊 Characteristics

Dominates in less economically developed countries (LEDCs)
Often low-paid and labour-intensive
Vulnerable to environmental factors
Produces raw materials for other sectors
Decreases in importance as countries develop

Secondary Sector

The secondary sector involves processing raw materials from the primary sector into manufactured products. This sector expands significantly during industrialisation.

🏭 Secondary Activities

Manufacturing and assembly
Food processing
Textile production
Construction
Energy production (electricity, gas)

📊 Characteristics

Grows rapidly during industrialisation
Creates more value than primary activities
Ranges from labour-intensive to highly automated
Often concentrated in urban areas
May decline as services grow in importance

Tertiary Sector

The tertiary sector provides services rather than tangible goods. This sector typically grows as countries become more economically developed.

💼 Tertiary Activities

Retail and wholesale trade
Transportation and logistics
Healthcare and education
Hospitality and tourism
Financial services
Government services

📊 Characteristics

Dominates in more economically developed countries (MEDCs)
Often requires higher education levels
Includes both low and high-paid jobs
Less dependent on natural resources
Continues to grow in post-industrial economies

Quaternary Sector

The quaternary sector involves knowledge-based activities and advanced services. Some geographers include this as part of the tertiary sector, but it's increasingly recognised as distinct.

💻 Quaternary Activities

Research and development
Information technology
Media and communications
Higher education
Consultancy services
Scientific research

📊 Characteristics

Highest value-added activities
Requires highly skilled workforce
Concentrated in developed economies
Often clustered in 'tech hubs' or around universities
Growing rapidly in the digital age

Employment Structure and Economic Development

As countries develop economically, their employment structure typically changes in a predictable pattern:

🌁 Low Development

Primary sector dominates (60-80% of workforce). Limited secondary and tertiary activities. Examples: Ethiopia, Malawi, Nepal.

🌅 Industrialising

Growing secondary sector (30-40%), declining primary sector (20-30%), expanding tertiary sector (30-40%). Examples: China, Mexico, Malaysia.

🌇 Post-Industrial

Dominant tertiary/quaternary sectors (70-80%), small primary sector (1-3%), declining secondary sector (15-25%). Examples: UK, USA, Japan.

These changes can be visualised using employment structure diagrams, which show the percentage of the workforce in each sector:

💡 Reading Employment Structure Diagrams

Employment structure diagrams typically show:

The proportion of workers in each sector (usually as percentages)
Changes over time (using multiple bars or lines)
Comparisons between different countries

A steep decline in primary sector employment with growth in tertiary/quaternary sectors indicates rapid economic development.

Case Studies: Employment Structure Changes

Case Study: UK's Changing Employment Structure

The United Kingdom provides a classic example of changing employment structure:

1800s: Primary sector dominated (agriculture, mining, fishing)
Early 1900s: Secondary sector grew during industrialisation (manufacturing, steel, textiles)
Mid-1900s: Tertiary sector expanded (retail, healthcare, education)
Late 1900s-present: Decline in manufacturing, growth in services and quaternary activities

By 2020, the UK's employment structure was approximately: Primary 1%, Secondary 18%, Tertiary/Quaternary 81%

Case Study: China's Rapid Transition

China demonstrates how employment structure can change rapidly during development:

1978: Primary 71%, Secondary 17%, Tertiary 12%
2000: Primary 50%, Secondary 22%, Tertiary 28%
2020: Primary 25%, Secondary 28%, Tertiary 47%

This rapid shift reflects China's transformation from an agricultural economy to a global manufacturing power and increasingly service-oriented economy.

Factors Influencing Employment Structure

🔬 Technology

Automation reduces jobs in primary and secondary sectors. Digital technology creates new quaternary sector opportunities. Mechanisation in farming dramatically reduces primary sector employment.

🌎 Globalisation

Manufacturing moves to countries with lower labour costs. Developed countries specialise in services and high-tech industries. Global supply chains create complex interdependencies.

🎓 Education

Higher education levels enable shift to tertiary and quaternary sectors. Skills gaps can slow economic transition. Lifelong learning becomes essential as economies evolve.

Applying Your Knowledge

When studying industry classification and employment structure, you should be able to:

Identify which sector different jobs and industries belong to
Explain how and why employment structure changes as countries develop
Interpret employment structure diagrams and data
Compare the employment structures of different countries
Analyse the factors that influence changes in employment structure
Evaluate the impacts of changing employment structure on people and places

⚠️ Exam Tip

In your exams, you might be asked to:

Describe patterns shown in employment structure diagrams
Explain why employment structure changes as countries develop
Suggest reasons for differences between countries
Discuss the advantages and disadvantages of shifting toward tertiary and quaternary activities

Always use specific examples and case studies to support your answers!

🧠 Test Your Knowledge!