What Is the Tertiary Industry?

What Is the Tertiary Industry?

Let me explain the tertiary industry to you directly: it's the technical term for the services sector in the economy, covering a broad array of businesses such as financial institutions, schools, hotels, and restaurants.

In a developed economy, you'll find three main industrial types: primary for raw materials, secondary for goods production, and tertiary for services. As an economy advances, it naturally shifts emphasis from primary to secondary and then to tertiary industries.

Key Takeaways

You should know that the tertiary sector divides into for-profit and nonprofit parts. Economists observe that as a nation's economy grows, the tertiary sector expands while the primary sector shrinks. Today, the service sector is the biggest part of the global economy by value-added, and it's crucial in advanced economies.

Understanding the Tertiary Industry

I see the tertiary industry split into two categories: one for profit-making companies like those in finance, and the other for nonprofits like state education.

This sector dominates employment and focuses entirely on services to consumers and organizations, not goods—which is why we call it the service sector. It differs from the primary industry that extracts raw materials and the secondary that turns them into products.

Remember, 'tertiary industry' can refer to a single organization or the whole segment.

Examples of Tertiary Industry Organizations

The tertiary industry includes services and frameworks for business, like shipping and transportation—think railroads or trucking focused on moving goods, or taxis, buses, and subways for people.

It also covers traditional hospitality like hotels and resorts, plus food services such as restaurants. Financial services from banks and investment brokers fall here too.

Personal services range from haircutting to tattooing, and extend to animal care like pet grooming or veterinary services. Medical facilities, including hospitals and clinics, qualify as well.

Pricing Challenges in the Tertiary Industry

Selling services presents challenges compared to products, as services are intangible and hard to price definitively. The value often depends on the provider's skills and personality, which vary.

For example, if two brokers offer identical services, how do you choose? It's not straightforward.

Transition From Tertiary to Quaternary

Some services, like telecommunications, cable, and internet providers, were once tertiary but now form the quaternary sector due to growth.

These businesses emphasize the knowledge economy, outpacing competitors by understanding customer needs and delivering efficiently at low cost. They're service-oriented but classified separately.

Who Has the Highest Output of Tertiary Services?

Based on World Bank data from 2020, here are the countries with the largest service or tertiary outputs.