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 being the secondary sector (approximately the same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining).

The service sector consists of the "soft" parts of the economy, i.e. 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. Services (also known as "intangible goods") include attention, advice, experience, and discussion. The production of information is generally also regarded as a service, but some economists now attribute it to a fourth sector, the quaternary sector.

The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the process of providing the service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods.

For the last 100 years, there has been a substantial shift from the primary and secondary sectors to the tertiary sector in industrialised countries. This shift is called tertiarisation.^[1] The tertiary sector is now the largest sector of the economy in the Western world, and is also the fastest-growing sector.

Examples[link]

Examples of tertiary industries may include the following. :

• Government
• Telecommunication
• Pharmaceuticals
• Healthcare/hospitals
• Public health
• Waste disposal
• Education
• Banking
• Insurance
• Financial services
• Legal services
• Consulting
• Information technology
• News medias
• Casinos
• Tourism
• Retail sales
• Franchising
• Real estate

Difficulty of definition[link]

It is sometimes hard to define whether a given company is part of the secondary or tertiary sector.

For example, public utilities are often considered part of the tertiary sector as they provide services to people, while creating the utility's infrastructure is often considered part of the secondary sector, even though the same business may be involved in both aspects of the operation.

In order to classify a business as a service, one can use classification systems such as the United Nations's 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 hierarchy that reflects whether the economic goods are tangible or intangible.

For purposes of finance and market research, 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[link]

Economies tend to follow a developmental progression that takes them from a 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") 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[link]

Service providers face obstacles selling services that goods-sellers rarely face. Services are not tangible, 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 price paid.

Since the quality of most services depends largely on the quality of the individuals providing the services, it is true that "people costs" are a high component 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.

Differentiation is often difficult. For example, how does one choose one investment adviser over another, since they often seem 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.

List of countries by service output[link]

Service output as a percentage of the top producer (USA) as of 2005

Below is a list of countries by service output in 2011.

Output of tertiary sector in 2011

Rank	Country	Output in billions of US$	Composition of GDP (%)	% of Global Tertiary Sector
—	World	43,967.335	62.8%	100.0%
—	European Union	13,128.911	73.1%	29.9%
1	United States	11,554.714	76.7%	26.3%
2	Japan	4,368.116	74.6%	9.9%
3	China	3,026.008	43.3%	6.9%
4	Germany	2,576.322	71.0%	5.9%
5	France	2,240.995	79.8%	5.1%
6	United Kingdom	1,927.720	77.7%	4.4%
7	Brazil	1,694.565	67.3%	3.9%
8	Italy	1,637.120	72.9%	3.7%
9	Canada	1,248.663	71.0%	2.8%
10	Russia	1,110.208	58.9%	2.5%
11	Spain	1,089.364	70.9%	2.5%
12	Australia	1,061.211	70.4%	2.4%
13	India	1,024.920	55.6%	2.3%
14	Mexico	751.426	63.4%	1.7%
15	South Korea	670.376	57.6%	1.5%
16	Netherlands	626.546	73.0%	1.4%
17	Turkey	487.618	63.9%	1.1%
18	Switzerland	474.785	71.3%	1.1%
19	Belgium	411.069	77.7%	0.9%
20	Sweden	407.527	71.3%	0.9%
-	Remaining Countries	5,627.819		12.8%

References[link]

Economics portal

This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. (March 2010)

Richard Douthwaite (6 August 1942 – 14 November 2011) was a British economist, ecologist, campaigner and writer living in Ireland. He died of cancer at his home near Westport, Co. Mayo.

Douthwaite studied engineering at Leeds and later economics at Essex universities. He built concrete boats at a cooperative in Port Antonio, Jamaica in the early 1970s and was then government statistician in the British Caribbean colony of Montserrat for two years before moving to Ireland (near Westport) to write and campaign about climate and energy issues and local economic development. He also set up and ran a leather crafts factory.

He was co-founder of Feasta (the Foundation for the Economics of Sustainability) an Irish based economic, social and environmental think tank. He had also been a council member of Comhar, the Irish government's national sustainability council and a Fellow of the Post Carbon Institute.

In the 1994 European Parliament election he stood unsuccessfully as the Green Party candidate for the Connacht–Ulster constituency.

He was a visiting lecturer at the University of Plymouth and contributed the economic content of the Master’s course in Theology and the Environment at Dalgan Park, Navan. He contributed lectures to courses at four parts of the National University of Ireland (Dublin, Maynooth, Cork and Galway) and at the universities of London (Goldsmiths and LSE), University of Edinburgh, University of Strathclyde, University of Leicester, University of Newcastle, University of Manchester, University of Uppsala, Malardalen, Stockholm (KTH) and University of Budapest.

Douthwaite's first book, The Growth Illusion: How Economic Growth Enriched the Few, Impoverished the Many and Endangered the Planet was published in 1992 and was re-issued in an extended and up-dated second edition in 1999. It explores why the present economic system is dependent on economic growth and the effects that the resulting pursuit of growth has had on the environment and society. His other major book, Short Circuit (1996) gives dozens of examples of currency, banking, energy and food production systems which communities can use to make themselves less dependent on an increasingly unstable world economy.

In The Ecology of Money, published in 1999, he calls for different currencies for different purposes and for changes in the way money is put into circulation so that a stable, sustainable economy can be achieved. In 2003 he edited Before the Wells Run Dry, a study of the transition to renewable energy in the light of climate change and oil and gas depletion and in 2004 To Catch the Wind, a report on how communities can invest in wind energy.

He acted as economic adviser to the Global Commons Institute (London) from 1993 to 2005 during which time GCI developed the "contraction and convergence" approach to dealing with greenhouse gas emissions which has now been backed by many countries. He then helped Feasta devise the "cap and share" framework for emissions reduction which may be adopted by the Irish government.

See also[link]

• Local Exchange Trading Systems
• Cap and Share

External links[link]

• Feasta: The Foundation for the Economics of Sustainability
• Short Circuit (online edition)
• The Ecology of Money (online edition)
• Post Carbon Institute
• Fleeing Vesuvius - Overcoming the risks of economic and environmental collapse (online edition)