Tertiary economic activity: definition, background, examples

The tertiary economic activity or sector is the most important in modern economies. It represents more than 60% of PIB in developed countries and employs most of the workforce of the world.

What is the tertiary economic activity or sector?

Tertiary sector definitions:
  • Definition 1: the tertiary economic activity or service sector encompasses the production of services instead of end goods that meet the needs of individuals.
  • Definition 2: the tertiary sector is composed of the “soft” parts of the economy, that is, activities where people offer their knowledge and time to improve the productivity, performance, potential, and sustainability of the economy.
tertiary sector

Services are also known as intangible goods and include care, advice, experience, and discussion, among others.

The tertiary economic activity involves not only the provision of services to consumers (B2C) but also to other companies (B2B). For example, consulting services from a digital agency to an online store.

Examples of tertiary economic activities:

  • Wholesale trade such as furniture and home furnishing, lumber and other construction materials, office equipment; medical, dental, and hospital equipment and supplies; household appliances and electrical and electronic goods; farm and garden machinery and sporting and recreational goods.
  • Retail trade such as motor vehicle and parts dealers, furniture and home furnishings stores, electronics and appliance stores, grocery and internet retailers.
  • Transportation and warehousing such as air, rail, water and truck transportation; transit and ground passenger transportation; pipeline transportation, postal service; couriers and messengers.
  • Publishing industries, motion pictures and sound recording, telecommunications, data processing, and hosting.
  • Finance and insurance.
  • Real estate and rental and leasing.
  • Professional, scientific, and technical services such as legal, accounting, architectural, engineering and marketing consulting services.
  • Educational services.
  • Health care and social assistance such as offices of physicians, outpatient care centers, and medical and diagnostic laboratories.
  • Arts, entertainment, and recreation.
  • Accommodation and food services such as hotels, casinos, special food services, drinking places, and restaurants.
retail and stores

Secondary and tertiary economic activities

There are activities that can be considered both as a part of the secondary sector and the tertiary sector. Some activities include both the production of physical goods and the provision of a service. This is the case of public works, which provide a service to society but at the same time involve the construction of infrastructure considered part of the secondary sector.

Quaternary and tertiary economic activities

The production and exchange of information are considered as part of the tertiary sector of the economy, although for some economists this economic sector constitutes a new sector, the quaternary sector. The quaternary sector can be considered a further delineation of the tertiary sector focused on knowledge-based activities.

Importance of the tertiary sector and tertiarization

Countries tend to follow a progression in their economic development, which leads them to have intensive production in primary activities, such as agriculture and mining, to develop the manufacturing industry, such as the production of cars or textiles, to then specialize in a service-based economy. This is called the tertiarization of the economy.

The main cause of the tertiarization of the economy is the increase in the income of families that allows them to achieve higher consumption levels of health services, education, insurance, and transportation, among others. Families spend more of their income on services while their proportional spending on primary and industrial goods falls. This shift in consumption patterns is reflected in the production of the economy.
Currently, tertiary economy activities are one of the most competitive sectors worldwide thanks to the dramatic reduction of communication costs, improving speed and reliability in the transport of people and goods, and access to information.

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