Sign up to access the complete lesson and track your progress!
Unlock This CourseEvery job and business activity fits into one of three main economic sectors. Understanding these sectors and why businesses choose specific locations is crucial for understanding how economies develop and change over time.
Key Definitions:
This sector dominates in developing countries where many people work in agriculture. Examples include wheat farming in Canada, coal mining in Australia and fishing in Norway. These activities are tied to natural resources and climate.
Manufacturing industries that turn raw materials into products. Car factories in Germany, textile mills in Bangladesh and steel plants in China are examples. This sector often grows as countries develop.
The natural environment plays a huge role in determining where economic activities locate. Different industries need different physical conditions to operate successfully.
Climate directly affects many economic activities, especially in the primary sector. Farmers need specific temperature and rainfall patterns for different crops, whilst tourism businesses depend on pleasant weather conditions.
Citrus fruits need warm climates like Southern Spain. Dairy farming works better in cooler areas like Northern England where grass grows well.
Rice farming needs lots of water, so it's common in monsoon areas of Asia. Wine production needs dry summers, perfect for Mediterranean regions.
Ski resorts need reliable snow in winter. Beach resorts need warm, dry summers to attract tourists from colder countries.
Industries often locate near the raw materials they need. This reduces transport costs and ensures steady supply of materials.
The discovery of oil and gas under the North Sea in the 1960s transformed the economy of Aberdeen, Scotland. The city became the "oil capital of Europe" with thousands of jobs in oil extraction, engineering and support services. Companies located there to be close to the offshore oil fields, creating a whole new economic cluster.
Human factors often matter more than physical ones, especially for secondary and tertiary industries. These factors relate to people, infrastructure and government policies.
Businesses need workers with the right skills at the right cost. Different industries have different labour requirements.
High-tech industries like computer software locate near universities and research centres. Silicon Valley in California attracts the world's best programmers and engineers.
Clothing manufacturers moved from expensive countries like the UK to cheaper locations like Bangladesh and Vietnam where wages are lower.
Good transport links are essential for moving raw materials, finished goods and workers. Different industries need different types of transport.
Most businesses need good road access for deliveries and staff. Shopping centres locate near motorway junctions for easy customer access.
Heavy industries like steel-making often locate near ports to import raw materials cheaply. Container ports handle manufactured goods for export.
High-value, time-sensitive industries locate near airports. Fresh flower exports from Kenya fly directly to European markets.
Governments can influence where businesses locate through various policies and incentives. They might want to encourage development in certain areas or types of industry.
Many governments try to spread economic development more evenly across their country, rather than having everything concentrated in one area.
The UK government created Enterprise Zones in areas that needed economic regeneration. These zones offer benefits like reduced business rates, simplified planning rules and improved infrastructure. The London Docklands Enterprise Zone transformed a declining port area into a major financial district with Canary Wharf.
As countries develop economically, the importance of different sectors changes. This is called economic transition or the Clark-Fisher model.
Most people work in primary industries like farming. As the country develops, more people move to secondary industries like manufacturing.
Most people work in tertiary services like healthcare, education and finance. Primary and secondary sectors become less important for employment.
Many developed countries have experienced deindustrialisation - the decline of manufacturing industries. This happens because:
The UK coal industry employed over one million people in the 1920s but declined rapidly after the 1980s. Mines closed because coal became too expensive to extract compared to imports and alternative energy sources. Former mining communities like those in South Wales and Northern England had to find new economic activities, often struggling with high unemployment and social problems.
New technologies and globalisation have created new factors that influence where businesses locate in the 21st century.
The internet and mobile communications have made location less important for some industries. Call centres can locate anywhere with good telecommunications, whilst online businesses can serve global markets from small towns.
Software companies can locate in cheaper areas whilst serving global markets. Estonia became a major tech hub despite its small size.
Many service jobs can now be done from home or shared workspaces, reducing the need to locate in expensive city centres.
E-commerce allows small businesses to sell worldwide, whilst social media enables marketing without expensive advertising.
Environmental factors are becoming increasingly important in location decisions as businesses and governments focus more on sustainability and climate change.
Modern businesses increasingly consider environmental impact when choosing locations. This includes access to renewable energy, potential for recycling and impact on local ecosystems.
Denmark's windy climate and government support made it a world leader in wind energy. Companies like Vestas located there to take advantage of testing conditions and skilled workers. The country now exports wind turbines globally and generates over 40% of its electricity from wind power.