Editing Tertiary sector of the economy

{{short description|Service sector}}
{{Redirect|Service industry|the Austin, Texas-based band|The Service Industry}}
{{For|the part of the economy sometimes referred to as the "third sector"|Voluntary sector}}
{{Economic sectors}}

[[File:Product’s lifecycle.jpg|thumb|upright=1.1|The [[product lifecycle]]]]

The '''tertiary sector of the economy''', generally known as the '''service sector''', is the third of the three [[economic sector]]s in the [[three-sector model]] (also known as the economic cycle). The others are the [[primary sector]] ([[raw material]]s) and the [[secondary sector]] ([[manufacturing]]).

The tertiary sector consists of the provision of [[Service (economics)|services]] instead of [[Product (business)|end products]].  Services (also known as "[[Intangible good|intangible goods]]") include attention, advice, access, experience and [[affective labour]]. 

The tertiary sector involves the provision of services to other businesses as well as to final consumers. Services may involve the [[transport]], [[distribution (economics)|distribution]] and sale of goods from a producer to a consumer, as may happen in [[wholesaler|wholesaling]] and [[retailer|retailing]], [[pest control]] or [[financial services]]. The goods may be transformed in the process of providing the service, as happens in the [[restaurant]] industry. However, the focus is on people by interacting with them and serving the customers rather than transforming the physical goods. The [[information economy|production of information]] has been long regarded as a service, but some economists now attribute it to a fourth sector, called the [[quaternary sector]].

== Difficulty of definition ==
It is sometimes hard to determine whether a given company is part of the secondary or the tertiary sector. It is not only companies that have been classified as part of a sector in some schemes, since governments and their services (such as the police or military), as well as [[nonprofit organization]]s (such as charities or research associations), can also be seen as part of that sector.<ref name="Lakhe2001">{{cite book|author=R.P. Mohanty & R.R. Lakhe|title=TQM in the Service Sector|url=https://books.google.com/books?id=ASwLRRY6vIAC&pg=PT33|access-date=1 May 2013|date=1 January 2001|publisher=Jaico Publishing House|isbn=978-81-7224-953-3|pages=32–33}}</ref>

To classify a business as a service, one can use classification systems such as the [[United Nations]]' [[International Standard Industrial Classification]] standard, the [[United States]]' [[Standard Industrial Classification]] (SIC) code system and its new replacement, the [[North American Industrial Classification System]] (NAICS), the [[Statistical Classification of Economic Activities in the European Community]] (NACE) in the EU and similar systems elsewhere. These governmental classification systems have a first-level of hierarchy that reflects whether the economic goods are tangible or intangible.

For purposes of [[finance]] and [[market research]], [[Market (economics)|market]]-based classification systems such as the [[Global Industry Classification Standard]] and the [[Industry Classification Benchmark]] are used to classify businesses that participate in the service sector. Unlike governmental classification systems, the first level of market-based classification systems divides the economy into functionally related markets or industries. The second or third level of these hierarchies then reflects whether goods or services are produced.

== Theory of progression ==
For the last 100 years, there has been a substantial shift from the primary and secondary sectors to the tertiary sector in industrialized countries. This shift is called '''tertiarisation'''.<ref name=eurofound>[http://www.eurofound.europa.eu/emire/GREECE/TERTIARIZATION-GR.htm Definition by the European Foundation for the Improvement of Living and Working Conditions] {{webarchive |url=https://web.archive.org/web/20140720074155/http://www.eurofound.europa.eu/emire/GREECE/TERTIARIZATION-GR.htm |date=July 20, 2014 }}</ref> The tertiary sector is now the largest sector of the economy in the [[Western world]], and is also the fastest-growing sector.
In examining the growth of the service sector in the early nineties, the [[Globalism|globalist]] [[Kenichi Ohmae]] noted that:

{{Blockquote|In the United States, 70 per cent of the workforce works in the service sector; in Japan, 60 per cent, and in Taiwan, 50 per cent. These are not necessarily busboys and live-in maids. Numerous of them are in the skilled category. They are earning as much as manufacturing employees, and often more.<ref>The Borderless World: Power and Strategy in the Interlinked Economy.</ref>}}

Economies tend to follow a developmental progression that takes them from heavy reliance on agriculture and mining, toward the development of [[manufacturing]] (e.g. automobiles, textiles, [[shipbuilding]], steel) and finally toward a more service-based structure. The first economy to follow this path in the modern world was the [[United Kingdom]]. The speed at which other economies have made the transition to service-based (or "[[Post-industrial economy|post-industrial]]") economies has increased over time.

Historically, manufacturing tended to be more open to [[international trade]] and competition than services. However, with dramatic cost reduction and speed and reliability improvements in the transportation of people and the communication of information, the service sector now includes some of the most intensive international competition, despite residual [[protectionism]].

== Issues for service providers ==
[[File:Risciò-in-avorio.jpg|thumb|Transport service]]
[[File:Automatic Telephone Exchange- Communications in Wartime, London, England, UK, 1945 D23700.jpg|thumb|right|Testing telephone lines in [[London]] in 1945]]
Service providers face obstacles selling services that goods-sellers rarely face.  Services are intangible, making it difficult for potential customers to understand what they will receive and what value it will hold for them. Indeed, some, such as [[consultants]] and providers of [[investment]] services, offer no guarantees of the value for the price paid.

Since the quality of most services depends largely on the quality of the individuals providing the services, "people costs" are usually a high fraction of service costs.  Whereas a manufacturer may use technology, simplification, and other techniques to lower the cost of goods sold, the service provider often faces an unrelenting pattern of increasing costs.

[[Product differentiation]] is often difficult. For example, how does one choose one [[investment adviser]] over another, since they are often seen to provide identical services.
Charging a premium for services is usually an option only for the most established firms, who charge extra based upon [[brand recognition]].<ref>{{cite book|last=De Soto|first=Glenn|title=Fragmented: the Demise of Unionized Construction|year=2006|publisher=Lulu.com|isbn=9781847285775|page=64}}{{self-published source|date=February 2020}}</ref>{{self-published inline|date=February 2020}}

== List of countries by tertiary output ==
{{Main|List of countries by GDP sector composition}}
[[File:2005gdpServices.png|right|upright=1.35|thumbnail|Service output as a percentage of the top producer (United States) as of 2005]]

== See also ==
{{Portal|Economics}}
* [[Economic sector]]
* [[Indigo Era]]
* [[Post-industrial society]]
* [[Outline of consulting]]
* [[Quaternary sector of the economy]]
* [[Voluntary sector]]

== References ==
{{Reflist}}

== External links ==
*{{Commonscatinline|Tertiary sector of the economy}}

{{Industries}}
{{Authority control}}
{{DEFAULTSORT:Tertiary Sector Of The Economy}}
[[Category:Economic sectors|+3]]
[[Category:Services sector of the economy| ]]
[[Category:Private sector|+3]]

[[de:Wirtschaftssektor#Terti.C3.A4rsektor_.28Dienstleistungssektor.29]]