An economic sector is a segmentation that arises from a certain classification of economic activity.
The notion of sector has several uses. In this case, we are interested in its meaning as the set of companies and businesses that are linked to a particular industry.
The adjective economic , meanwhile, refers to that related to the economy . Economy, in turn, is called the totality of the activities and products that make up the wealth of a region; to the logical and effective management of assets; and to the science dedicated to the analysis of procedures that help satisfy material needs by appealing to the use of limited goods.
What is an economic sector
The economy can be classified or divided in different ways depending on the criteria considered. When a segmentation is carried out according to the characteristics of the activity , economic sectors emerge.
It can be said that an economic sector is born when the economy is divided into areas that bring together producers, service providers and intermediaries according to certain factors. It is possible to consider the production process, added value, property and raw materials or inputs for the formation of these groups.
Companies that are dedicated to obtaining raw materials make up the primary economic sector.
The most used division
The traditional classification of economic activity recognizes three large sectors: the primary sector , the secondary sector and the tertiary sector . In any case, there are some economists who, starting from this basis , add the quaternary sector and the quinary sector .
The primary economic sector is the one that works with natural resources directly. This group includes all companies dedicated to obtaining raw materials through activities such as agriculture , livestock and fishing , for example .
The secondary economic sector is responsible for the transformation of raw materials provided by the primary sector, generating partially prepared or already finished products. The automotive industry and construction , to mention two cases, make up the secondary sector.
The tertiary sector, on the other hand, is associated with services: these companies do not offer products (material goods), but rather provide services. Telecommunications , tourism and transportation are part of this economic sector.
Economic sectors according to ownership and management
Economic sectors are sometimes defined by the ownership and/or management of resources . This is how we find the public sector , the private sector and the so-called third sector .
Public sector companies are owned by the State . These companies' main mission is to fulfill a social role and not to generate profits.
The private sector, on the other hand, is made up of firms under the control of private individuals or non-state companies. In this case, the objective is to obtain benefits (that is, profit). The third sector, finally, is based on cooperativism and solidarity.
Some examples
It is possible to use various examples to easily understand what the idea of an economic sector refers to. If we think about the traditional division of economic activity, we can indicate that a company dedicated to the cultivation of sugar cane falls within the primary sector; an entity that processes sugar cane to produce bioethanol belongs to the secondary sector; and a corporation that limits itself to selling that already manufactured fuel is part of the tertiary sector.
Renfe , on the other hand, is a public sector corporation in Spain . Regarding the private sector, we can name Microsoft Corporation and American Express Company , among many others.