Economics

Tertiary Industry

Published Oct 26, 2023

Definition of Tertiary Industry

The tertiary industry refers to the sector of the economy that provides services to consumers and other businesses. It is also known as the service industry or the service sector. Unlike the primary industry, which involves extracting raw materials, and the secondary industry, which involves manufacturing and construction, the tertiary industry focuses on the delivery of intangible goods and services.

Example

Examples of businesses in the tertiary industry include retail stores, restaurants, banks, insurance companies, healthcare providers, hotels, transportation services, consulting firms, and entertainment venues. These businesses primarily offer services rather than physical products.

For instance, imagine a clothing retail store. The store sells clothes to customers, offers assistance with outfit selection, provides fitting rooms for customers to try on clothes, and handles returns and exchanges. The store does not produce the clothes itself but acts as an intermediary between the clothing manufacturers and the end consumers. This retail store falls into the tertiary industry category.

Why Tertiary Industry Matters

The tertiary industry plays a crucial role in modern economies. It provides essential services that improve the quality of life for individuals and facilitate economic activity for businesses. The growth of the tertiary industry is often associated with increased economic development and higher living standards.

The service sector typically requires a skilled workforce, driving the need for education and training programs to meet the demands of the industry. As economies transition from predominantly agricultural and manufacturing-based to service-based, the tertiary industry becomes an increasingly significant contributor to employment and economic growth. Policymakers and business leaders closely monitor the health and performance of the tertiary industry as it serves as an indicator of economic progress and development.