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Different Sectors and Types of Economies

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The economic activities of any country are classified into different categories which are known as the Sectors of the Economy. There are three main sectors. They are,

  • Primary Sector
  • Secondary Sector
  • Tertiary Sector

Primary Sector

Primary sector is an important sector in an economy where there is the direct use of natural resources as agriculture, forestry, fishing, minerals, etc. The primary sector is usually most important in less developed countries, and typically less important in industrial countries.

Secondary Sector

The Secondary Sector of the economy also known as Manufacturing Sector includes those economic sectors that create a finished, usable product – production and construction. This sector uses the products of the primary sector as its raw materials. For example, wheat or rice is the product from primary sector. Making biscuits or bread from rice or wheat in an industry comes under secondary sector.

Many of these industries consume large quantities of energy and require factories and machinery to convert the raw materials into goods and products. They also produce waste materials and waste heat that may pose environmental problems or cause pollution.

Tertiary Sector

This sector is also known as Service Sector. The basic characteristic of this sector is the production of services instead of end products. It includes all those economic activities where different ‘services’ are produced such as education, information technology, real estate, healthcare, entertainment, telecommunication, mass media, banking, insurance, transportation, tourism, legal services, etc.


Economies are classified into three main types based on the shares of the specific sectors in the total production of an economy and the ratio of the population depend on them. The three types are,

  • Agrarian Economy
  • Industrial Economy
  • Service Economy

Agrarian Economy
An economy is called agrarian if the share of its primary sector is 50 per cent or more in the total
output (the GDP) of the economy. It is a type of economy that relies primarily on agricultural industry including livestock farming or crop production. It is one of the oldest forms of economies still in existence.

Industrial Economy

If the secondary sector contributes 50 per cent or more to the total produce value of an economy, it is an industrial economy. Higher the contribution, higher is the level of industrialization.

Service Economy
The economy whose 50 per cent or more produce value comes from the tertiary sector is known as the service economy. India is a service economy. The tertiary sector has contributed more than 68 per cent in its GDP by 2012–13.