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Chapter 2

The document outlines the classification of businesses into three sectors: primary (natural resources), secondary (manufacturing), and tertiary (services). It discusses changes in sector importance between developing and developed countries, highlighting trends like de-industrialisation and the shift towards a service-oriented economy. Additionally, it explains the differences between private and public sectors, the concept of a mixed economy, and provides case examples from various countries.

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4 views2 pages

Chapter 2

The document outlines the classification of businesses into three sectors: primary (natural resources), secondary (manufacturing), and tertiary (services). It discusses changes in sector importance between developing and developed countries, highlighting trends like de-industrialisation and the shift towards a service-oriented economy. Additionally, it explains the differences between private and public sectors, the concept of a mixed economy, and provides case examples from various countries.

Uploaded by

bihariniga69
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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📘 Chapter 2 – Classification of Businesses

2.1 Sectors of Industry (by Activity)

1. Primary Sector
o Uses natural resources.
o Examples: Farming, fishing, mining, forestry.
2. Secondary Sector
o Converts raw materials into finished goods.
o Examples: Car manufacturing, construction, bakeries.
3. Tertiary Sector
o Provides services to consumers and other businesses.
o Examples: Retail, banking, hotels, transport.

2.2 Changes in Sector Importance

 Developing countries
o High employment in primary sector (agriculture, mining).
o Low demand for services.
 Developed countries
o Decline in primary sector (depletion of resources, mechanisation).
o Growth of secondary sector (industrialisation).
o Eventually, shift to tertiary sector dominance (de-industrialisation).

De-industrialisation = decline in importance of manufacturing (secondary sector).

Causes of changes:

 Resource depletion (e.g., forests cut down).


 Competition from newly industrialised countries.
 Rising incomes → higher demand for services (e.g., travel, restaurants).

2.3 Private vs Public Sector

 Private Sector
o Owned and controlled by individuals.
o Aim: Profit.
o Decisions on production, pricing, and operations made by owners.
 Public Sector
o Owned/controlled by government.
o Provides services often free/subsidised (education, healthcare, defence).
o Funded by taxpayers.

2.4 Mixed Economy

 Nearly all countries have both private sector + public sector.


 Balance differs country to country.
 Example: UK healthcare (public), but supermarkets (private).

Privatisation: Transfer of public sector business → private ownership.

 Advantages: More efficiency, more investment, competition improves quality.


 Disadvantages: Job losses, less focus on social objectives, profit-driven.

2.5 Case Examples

 Papua New Guinea → primary sector (mining, timber).


 India → secondary & tertiary growing fast (IT, services).
 Bangladesh → shift from agriculture → manufacturing + services.
 Mauritius → economy dominated by tourism (tertiary).

Key Definitions to Learn

 Primary sector: Extracts natural resources.


 Secondary sector: Manufactures goods using raw materials.
 Tertiary sector: Provides services.
 Mixed economy: Combination of private & public sector businesses.
 Privatisation: Selling government-owned businesses to private owners.
 De-industrialisation: Decline in secondary sector importance.

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