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Understanding Business Sector Classifications

The document outlines the classification of businesses into primary, secondary, and tertiary sectors, detailing their roles and economic significance in developed and developing countries. It explains the differences between public and private sector enterprises in a mixed economy, highlighting the shift in importance of these sectors over time due to industrialization and de-industrialization. Additionally, it discusses the impact of privatization on mixed economies.

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Chloe Mirembe
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11 views11 pages

Understanding Business Sector Classifications

The document outlines the classification of businesses into primary, secondary, and tertiary sectors, detailing their roles and economic significance in developed and developing countries. It explains the differences between public and private sector enterprises in a mixed economy, highlighting the shift in importance of these sectors over time due to industrialization and de-industrialization. Additionally, it discusses the impact of privatization on mixed economies.

Uploaded by

Chloe Mirembe
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

CLASSIFICATION OF BUSINESSES

Levels/Stages of economic activity


This chapter will explain:
 The differences between primary, secondary and tertiary production

 The reasons for the changing importance of business classification, for example, in
developed and developing countries

 The differences between public sector and private sector business enterprises in a
mixed economy.
 Primary sector: The natural resources extraction sector. E.g. farming, forestry,
mining... (earns the least money)

 Secondary sector: The manufacturing sector. E.g. construction, car manufacturing,


baking... (earns a medium amount of money)

 Tertiary sector: The service sector. E.g banks, transport, insurance... (earns the most
money)
Activity 1- Page 12
Page 12
Importance of a sector in a country:
Which sector of industry is most important in your country?
The three sectors of the economy are compared by:
a) Percentage of the country’s number of workers employed in each
sector
b) Value of output of goods and services and the proportion this is
of total national output.
IMPORTANCE OF ECONOMIC SECTORS
Different countries operate at different stages of production.
- In some countries, primary sector such as farming and mining employ many more people
than the other sectors. That means their output is mainly from the primary sector. These
are called developing countries.

- In countries where manufacturing industries are developed, secondary and tertiary sector
employ majority of the population. In economically developed countries, the output of the
tertiary sector is often higher than the other two sectors combined. Such countries are
often called the most developed countries.
Reasons for changes in the relative importance of the three sectors
over time:
a) Sources of some primary products , such as timber, oil and gas, become
depleted. E.g Somalia because of cutting down of trees.
b) Most developed countries are losing competitiveness in manufacturing to
newly industrialized countries such as Brazil, India and China.
c) As a country’s total wealth increases and living standard rise, consumers
tend to spend a higher proportion of their income on services such as
travel and restaurants than on manufactured products produced from
primary products.
Changes in sector importance
 Industrialization: a country is moving from the primary sector to the
secondary sector.
 De-industrialization: a country is moving from the secondary sector to the
tertiary sector. In both cases, these processes both earn the country more
revenue.
Mixed economy
A mixed economy is composed of both private and public sector.
Mixed Economy
Private sector
- These are businesses owned by individuals and organizations.
- They make their own decisions without the influence of the government.
- Main aim is to make and maximize profit.
Public sector
- Government owned businesses
- Government makes major decisions
- Their aim is to provide essential services to the public, either free or at low
cost.
Mixed economies- Recent changes

Privatisation- Privatisation occurs when a government owned business,


operation or property becomes owned by, non-government party.

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