Primary, secondary and tertiary sectors

There are three main types of industry in which firms operate. These sectors form a chain of production which provides customers with finished goods or services.

  • Primary production: this involves acquiring raw materials. For example, metals and coal have to be mined, oil drilled from the ground, rubber tapped from trees, foodstuffs farmed and fish trawled. This is sometimes known as extractive production.
  • Secondary production: this is the manufacturing and assembly process. It involves converting raw materials into components, for example, making plastics from oil. It also involves assembling the product, eg building houses, bridges and roads.
  • Tertiary production: this refers to the commercial services that support the production and distribution process, eg insurance, transport, advertising, warehousing and other services such as teaching and health care.
Oil is extracted at primary production, refined at secondary production and distributed and sold as petrol at the tertiary production stage.

The chain of production shows interdependence: firms rely on other businesses in different sectors for raw materials, components or distribution.

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