Tertiary Sector of the Economy: Definition and Examples

The tertiary sector of the economy, also known as the service sector, provides services instead of finished products.

The quaternary and quinary sectors are considered to be extensions of this sector. Services provided by the tertiary sector include attention, information, advice, access, experience, and affective labor.

The tertiary sector fundamentally differs from the primary and secondary sectors because it doesn’t produce tangible objects.

The tertiary sector includes every industry that produces intangible services: communications, trade, banking, software development, therapy, government services, nonprofit organizations, information services, engineering services, healthcare services, real estate, education, and so on (Lakhe, 2008, pp. 32-3).

Developed countries usually have a strong tertiary sector. Since machines allow a smaller workforce to produce tangible goods, services become relatively more important.

What are the Five Sectors of the Economy?

Economic activity can be divided into five main sectors, outlined below.

These sectors are known as the primary sector (raw materials), the secondary sector (manufacturing), the tertiary sector (services), the quaternary sector (information services), and the quinary sector (human services) (Clark, 1940; Kuznets, 1966).

The quaternary and the quinary sectors are considered extensions of the tertiary sector. Each plays a vital role in the economy.

• The primary sector involves the extraction and production of raw materials. Examples include farming, mining, fishing, logging, and so on.
• The secondary sector involves the transformation of raw or intermediate materials into goods. Examples include the production of clothing with textiles, bottles with glass, cars with steel, and so on.
• The tertiary sector involves the supplying of services to consumers and businesses. Examples include accounting, retail, baking, babysitting, and so on.
• The quaternary sector is an extension of the tertiary sector and includes information or knowledge-based services. Examples include research, media, consultation, education, blogging, etc.
• The quinary sector is an extension of the tertiary sector with varying definitions. It is often thought of as the sector responsible for services provided by the highest levels of organization in society, including services such as government, military, education, and healthcare.

15 Tertiary Sector Examples

• Telecommunications – The transmission of information over wire, radio, optical, or other electromagnetic systems.
• Hospitality industry – A broad category of fields that include hotels, motels, breakfast inns, cabins, cottages, lodging houses, restaurants, cafes, coffee shops, diners, travel agencies, tour operators, and many more.
• Healthcare – A category of services that includes medicine, optometry, dentistry, pharmacy, nursing, psychology, athletic training, and many more.
• Mass media – An array of media technologies that reach a large audience via mass communication.
• Pharmacy – The science and practice that provides medications, aiming to ensure their safe, effective, and affordable use.
• Information technology – The use of computers to create, process, store, retrieve, and exchange any kind of information. IT is generally used within the context of business operations.
• Waste disposal – The processes and actions required to manage waste from its inception to its final disposal. This includes the collection, transport, treatment, disposal, monitoring, and regulation of waste.
• Consulting – Services that provide professional advice to the public or to those practicing the profession on how to modify or proceed in a given process within that field.
• Retail – The sale of goods and services to consumers. A retailer buys goods in large quantities from manufacturers and then sells in smaller quantities to consumers for a profit. Retailers are the final link in the supply chain from producers to consumers.
• Real estate – Services that provide the opportunity to purchase property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.
• Education – Activities directed at transmitting knowledge or fostering skills and character traits. Education can be formal, non-formal, or informational.
• Financial services – Economic services provided by the finance industry. These services include banking, insurance, accounting, and investment management.
• Professional services – Services that require special training. Examples include lawyers, architects, accountants, engineers, doctors, and teachers.
• Transportation – Any services that provide a way to move from one location to another, be they public or private. This could be transportation of goods (e.g. the post man) or people (e.g. taxi drivers).
• Freelancing – The growing freelancing or ‘gig economy’ generally fits into the tertiary sector. It involves people offering a service for a fee.

5 Top Tertiary Sector Industries

1. Retail

Retailing is the selling of merchandise and certain related services to consumers. It generally involves the selling of individual units or small lots to many customers by a business set up for that exact purpose.

A retailer buys merchandise in large quantities from manufacturers and then sells them in smaller quantities to consumers for a profit.

Retailers are the final link in the supply chain that stretches from producers to consumers. Retailing is extremely competitive. The mortality rate of retail businesses is, therefore, fairly high.

Some retailers specialize in merchandise sold in bulk, while others create large stores that offer groceries as well as a variety of other goods at discounted prices. Competition for sales pushes retailers to sell a wider variety of merchandise than they originally might have intended.

All retail services, be they specialized or not, fall into the tertiary sector of the economy.

2. Waste Disposal

Also called waste management, this includes the processes and actions required to manage waste from its inception to its disposal.

Waste is produced by human activity, for example, the extraction and processing of raw materials that is the essence of the primary sector of the economy. Waste management, a tertiary sector activity, is in turn intended to mitigate this.

To reduce the adverse effects of waste on the environment, human health (Giusti, 2009), and planetary resources.

Waste management methods are not uniform among countries or regions. This is because one method cannot deal with all potential waste materials in a sustainable manner.

The context is always different, so the practices for managing waste must also differ. The practices may differ, but waste management in general can be considered a part of the tertiary sector of the economy.

3. Public Health

Public health is the “science and art of preventing disease, prolonging life and promoting health through the organized efforts and informed choices of society, organizations, public and private, communities and individuals” (Winslow, 1920).

Public health plays a vital role in disease prevention across the globe. Despite the fact that most governments recognize the importance of these services, they generally used to receive significantly less funding compared to medicine (Gatseva & Argirova, 2011).

Analysis of the health threats a population might face is the basis of public health. The term ‘public’ might mean a group as small as a village or as large as the entire world in case of a pandemic. The concept of ‘health’ encompasses physical, psychological, and social well-being. Public health services are all part of the tertiary sector of the economy.

4. Professional Services

Definitions of what counts as a professional service differ significantly. Commonly cited examples include accounting, law, management consulting, engineering, advertising, architecture, investment banking, marketing, insurance, software development, and many more.

Therefore, the link between these examples is that all of these services require particular expertise or a particular knowledge base (von Nordenflycht, 2010, p. 156).

The distinctiveness of professional services can come from three sources: knowledge intensity, low capital intensity, and a professionalized workforce (von Nordenflycht, 2010, p. 170).

Other definitions consider that low capital intensity is not a necessary condition for something to be considered a professional service. Irrespective of these nuances, all professional services are part of the tertiary sector of the economy.

5. Mass Media

Mass media refers to media technologies that reach a large audience via mass communication.

This includes broadcast media such as films, radio, recorded music, or television, as well as digital media such as the internet and mobile mass communication. This website is itself a mass media service.

All mass media services are part of the tertiary sector because they provide information, a service rather than a tangible object.

Conclusion

Economic activities are traditionally grouped into three categories. These are the primary, secondary, and tertiary sectors. Two additional economic sectors are considered extensions of the tertiary sector: the quaternary and the quinary sectors. The tertiary sector is the one that provides intangible goods, i.e., services, instead of tangible products.

References

Clark, C. (1940). The Conditions of Economic Progress. Macmillan.

Gatseva, P. D., & Argirova, M. (2011). Public health: The science of promoting health. Journal of Public Health, 19(3), 205–206. https://doi.org/10.1007/s10389-011-0412-8

Giusti, L. (2009). A review of waste management practices and their impact on human health. Waste Management, 29(8), 2227–2239. Doi: https://doi.org/10.1016/j.wasman.2009.03.028

Kuznets, S. (1966). Modern Economic Growth. Yale University Press.

Lakhe, R. P. M. & R. R. (2008). TQM in the Service Sector. Jaico Publishing House.

von Nordenflycht, A. (2010). What Is a Professional Service Firm? Toward a Theory and Taxonomy of Knowledge-Intensive Firms. The Academy of Management Review, 35(1), 155–174.

Winslow, C.-E. A. (1920). The untilled fields of public health. Science 51:23.