ⓘ Three-sector model

                                     

ⓘ Three-sector model

The three-sector model in economics divides economies into three sectors of activity: extraction of raw materials, manufacturing, and services. According to the model, the main focus of an economys activity shifts from the primary, through the secondary and finally to the tertiary sector. Countries with a low per capita income are in an early state of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy. The model was developed by Allan Fisher, Colin Clark, and Jean Fourastie.

                                     

1. Structural transformation according to Fourastie

Fourastie saw the process as essentially positive, and in The Great Hope of the Twentieth Century he wrote of the increase in quality of life, social security, blossoming of education and culture, higher level of qualifications, humanisation of work, and avoidance of unemployment. The distribution of the workforce among the three sectors progresses through different stages as follows, according to Fourastie:

                                     

1.1. Structural transformation according to Fourastie First phase: Traditional civilizations

Workforce quotas:

  • Tertiary sector: 15.5%
  • Secondary sector: 20%
  • Primary sector: 64.5%

This phase represents a society which is scientifically not yet very developed, with a negligible use of machinery. The state of development corresponds to that of European countries in the early Middle Ages, or that of a modern-day developing country.

                                     

1.2. Structural transformation according to Fourastie Second phase: Transitional period

Workforce quotas:

  • Tertiary sector: 20%
  • Secondary sector: 40%
  • Primary sector: 40%

More machinery is deployed in the primary sector, which reduces the number of workers needed. As a result, the demand for machinery production in the secondary sector increases. The transitional way or phase begins with an event which can be identified with the industrialisation: far-reaching mechanisation and therefore automation of manufacture, such as the use of conveyor belts.

The tertiary sector begins to develop, as do the financial sector and the power of the state.

                                     

1.3. Structural transformation according to Fourastie Third phase: Tertiary civilization

Workforce quotas:

  • Primary sector: 10%
  • Secondary sector: 20%
  • Tertiary sector: 70%

The primary and secondary sectors are increasingly dominated by automation, and the demand for workforce numbers falls in these sectors. It is replaced by the growing demands of the tertiary sector. The situation now corresponds to modern-day industrial societies and the society of the future, the service or post-industrial society. Today the tertiary sector has grown to such an enormous size that it is sometimes further divided into an information-based quaternary sector, and even a quinary sector based on human services.

                                     

2. Extensions to the three-sector model

Quaternary sector

The quaternary sector comprises mainly intellectual activities and knowledge based activities aimed at future growth and development. Activities include scientific research, education, consulting, information management and financial planning.

Quinary sector

Quinary activities are services that focus on control, such as government, and creation or non-routine use or creation of information and new technologies.

Sometimes referred to as gold collar’ professions, they represent another subdivision of the tertiary sector representing special and highly paid skills of senior business executives, government officials, research scientists, financial and legal consultants, etc. The highest level of decision makers or policy makers perform quinary activities.