Understanding the Tertiary Sector and Modern Trade

The Tertiary Sector

The tertiary sector of the economy, also known as the service sector or the service industry, is one of the three economic sectors. The others are the secondary sector (manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining).

The service sector consists of the "soft" parts of the economy—activities where people offer their knowledge and time to improve productivity, performance, potential, and sustainability. The basic characteristic of this sector is the production of services instead of end products.

Defining Services

Services, also known as intangible goods, include:

• Attention
• Advice
• Access
• Experience
• Discussion

The production of information is generally regarded as a service, though some economists attribute it to a fourth sector: the quaternary sector. The tertiary sector involves the provision of services to other businesses as well as final consumers.

Service Delivery and Interaction

Services may involve the transport, distribution, and sale of goods from producer to consumer, as seen in wholesaling and retailing. Alternatively, they may involve the provision of a specific service, such as pest control or entertainment. While goods may be transformed in the process—as happens in the restaurant industry—the focus remains on people interacting with people and serving the customer rather than transforming physical goods.

The Shift Toward Tertiarization

Over 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 tertiarization. The tertiary sector is now the largest and fastest-growing sector of the economy in the Western world.

Trade

Trade is the transfer of ownership of goods and services from one person or entity to another in exchange for something of value. Trade is sometimes referred to as commerce or a financial transaction. A network that allows trade is called a market.

The Evolution of Trade

• Barter: The original form of trade, involving the direct exchange of goods and services.
• Medium of Exchange: Over time, trade evolved to include precious metals, coins, bills, and paper money.
• Modern Trade: Today, traders generally negotiate through a medium of exchange, such as money. This allows buying to be separated from selling or earning.

The invention of money, credit, and non-physical currency has greatly simplified and promoted trade. Trade between two parties is called bilateral trade, while trade involving more than two parties is called multilateral trade.