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The primary sector comprises the getting of raw materials, the growing of food and the catching of fish. Industries in this sector include: mining for oil, coal, iron, and other minerals; forestry, agriculture, fish farming and land reclamation, etc. In the primary sector are also included the energy-making utilities like coal, oil and nuclear-fuelled power stations, gas making plants and hydroelectric schemes. Secondary sector This sector refines processes and manufactures and includes industries like petrochemical refineries, steel making mills, factories for making equipment and machinery for industry and goods for consumer purchase.
Tertiary sector In this sector are the business which distribute and retail the manufactured goods; they include transport companies which deliver goods by air, sea or land, wholesalers, breaking bulk from warehouses to retail store, retailing chain stores and multiples, franchised shops, newsagents and supermarkets, etc. Also included in this sector are the service industries which sell commodities like information, training, legal advice and finance cover provided by insurance companies, banking services, on-line database providers, office cleaning companies and telephone companies etc.
Many businesses inhabit only one of the sectors and will sell their product onto the next. Extractors of iron ore, for example, may sell it on to a steel mill, or manufactures of lawn mowers may sell them on to wholesalers. Some firms however, chose to operate in two or even all three sectors by, for example, owning farms which grow wheat, mills which process it into flour, bakeries which produce bread and cakes and shops which retail the end products.
Such companies, of which Marks and Spencer is one, are said to be vertically integrated and they benefit from the profits generated at each stage of the process. As a country’s economy develops, so the relevant importance of each sector will change. Before the industrial revolution most people were employed in agriculture. By the 1850’s the manufacturing sector of the economy was the most important sector for employment and output. From the latter part of the nineteenth century the tertiary sector grew in importance as it supported or serviced the manufacturing industry.
Today the service sector is the largest employer and contributes most to the UK’s economy. The decline in the importance of manufacturing is generally known as deindustrialisation. Deindustrialisation means a decline in manufacturing in terms of: The absolute employment level The total share of employment in the economy A decline in the share of output in the economy The causes of deindustrialisation include the lack of competitiveness of UK goods with foreign goods both at home and abroad. This lack of competitiveness can be on price delivery and quality.
During the 1980’s UK manufacturers had to contend with a high exchange rate brought about by the exporting of North Sea Oil and high UK exchange rates. This made it difficult to export because the high pound made exports difficult and expensive to sell abroad. In the home market the manufacturers had to compete against cheaper imports. The importance of manufacturing to the UK economy is that other sectors depend on it and cannot operate without manufactured goods. The catering industry needs plates, saucepans, tables and chairs.
All items produced by manufacturers can be sold abroad and earn foreign currency, but this si not the same with the tertiary sector. Although the service sector makes a significant contribution to the UK’s balance of payments, some services, such as rail services and those of firemen and traffic wardens cannot be sold abroad. Service industries need manufactured goods in order to provide for their customers. Hotels and restaurants are in the service sector, but need buildings, furnishings, carpets and crockery and cutlery, cash registers, computers, stationary and a host of other manufactured goods.
The decline in the manufacturing sector means that the UK is in a weaker position for competing with countries such as Japan. However, some economists argue that deindustrialisation is just part of the natural development of the economy. The UK was the first to industrialise, so the likelihood is that the UK will be one of the first nations to move on to the next stage in economic development. Other countries such as the United States of America are experiencing similar situations in their secondary sectors.