Economic sectors
AQA also says:
Spec content: Primary, secondary and tertiary sectors; Goods and services.
Students should be able to understand: the meaning of primary, secondary and tertiary sectors and their relative sizes in the UK; the difference between a good and a service.
The Three Sectors of Economic Activity
Economic activity is organised into three broad sectors based on the type of production undertaken. Understanding these sectors helps explain the structure of an economy, how it has changed over time, and how different countries compare.
| Sector | What it involves | UK examples |
|---|---|---|
| Primary | Extracting or harvesting raw materials directly from nature. The first stage in the chain of production. | Farming, fishing, forestry, mining, oil and gas extraction, quarrying |
| Secondary | Manufacturing and construction — transforming raw materials into finished goods. | Car manufacturing, food processing, steel production, house building, electronics assembly |
| Tertiary | Providing services to consumers and other businesses. No physical product is created. | Retail, banking, healthcare, education, transport, hospitality, insurance, legal services |
The Relative Size of Sectors in the UK
The UK is a predominantly tertiary economy. The service sector accounts for approximately 80% of UK GDP and employment. Financial services, retail, healthcare, and education are among the largest contributors. The secondary sector (manufacturing and construction) accounts for around 19% of GDP, having declined significantly since the mid-twentieth century due to deindustrialisation. The primary sector is the smallest — agriculture, fishing, and extractive industries account for under 1% of UK GDP, though they remain strategically important for food security and energy supply.
This shift from primary and secondary towards tertiary activity is a common feature of economic development — as countries become wealthier, consumers spend proportionally more on services.
Goods vs Services
The output of an economy consists of goods and services, which are distinct in important ways:
- Goods are physical, tangible products that can be touched, stored, and transported. A car, a loaf of bread, a television, and a pair of trainers are all goods. Goods produced in one place can be transported and sold elsewhere.
- Services are intangible activities performed for a consumer. A haircut, a medical consultation, a bank transfer, and a music concert are all services. Services are typically consumed at the same time as they are produced — a haircut cannot be stored and consumed later.
The distinction is not always sharp — many products bundle goods and services together. A restaurant meal involves both physical food (a good) and the act of preparing and serving it (a service). Modern economies increasingly blend the two.
Key Takeaways
- Primary sector: extracting raw materials (farming, mining, fishing).
- Secondary sector: manufacturing and construction (turning raw materials into finished goods).
- Tertiary sector: services (retail, banking, healthcare, education) — accounts for ~80% of UK GDP.
- Goods are tangible physical products; services are intangible activities — typically consumed as they are produced.