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Economic Systems
Classification of Economic Activity
Difficult to classify as it depends on the person & the measures used.
Primary: - Production of timber, farming etc. Use of raw materials. These consist of low-value added
industries.
Secondary: - Manufacturing e.g. car industry, steel where a product is produced.
2 types:
 Basic industries – serve industry.
 Consumer industries – direct sale to consumers.
Tertiary: - Services for industry, e.g. gas & water & includes shops.
Quaternary: - Producer orientated acts on behalf of commercial organisations e.g. banking,
Advertising. This is the gathering of information & the development of ideas – R&D
Quinary: - Consumer orientated e.g. shops, government etc.
Variations in sectors are dependent on development of country. There is a rapid change from primary
to industry & services in LEDCs.
Major Centres of Manufacturing Industry
Ruhr E
E
Kansai Region
Upper Midw est
ShangheiE
E
E
Bangalore
E
E
Bangkok
Sao Paulo
E
E
Taipei
S Africa
Manufacturing will be different in different regions. Areas in Asia such as Taipei, Bangalore and
Shanghai specialise in hi-tech industry such as electronics and
Semi-conductors. Sao Paulo and Bangkok are mainly car industry areas while the Ruhr is a steel
producing area. The Kansai region contains pharmaceutical manufacturing.
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Uk Employment
12%
Primary
Secondary
Tertiary
Quaternary
Quinary
31%
19%
6%
32%
Development-Stage Model
Key
Sector % employment
70
Primary
60
Secondary
50
Tertiary
40
Quaternary
30
20
10
0
Pre-industrial
Industrial
Post-industrial
Time
Developed economies employ a smaller proportion of people in the primary sector and higher
proportions of secondary & tertiary. There are different stages of economic development. This is the 3
sector model of economic development. The balance of employment is called the economic structure.
The model is good for predictions about MEDCs. However it is not very good for LEDCs or NICs. It
does include quaternary but doesn’t include quinary or explain what they include.
Secondary employment is decreasing in European countries due to the automation of factories, which
means that there are fewer jobs available. Higher wages mean that prices are undercut and so industry
is less willing to locate in MEDCs.
Secondary employment is increasing in Asian countries due to increased development of Asian
countries. TNCs locate to Asia as people are well trained but have cheaper wages. Also there is an
expanding market in SE Asia.
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Describing the Development stage model - UK
Decrease in Primary Industry:
 Better technology
 Higher yield so less farmers needed
 Mechanisation – jobs lost
 Cheaper abroad
 Resources running out – Tin mines in Cornwall.
 CAP – Dairy quotas, set-aside etc.
 Disease – BSE wipes out all the herds.
 Not all bad as there has been an increase in the number of jobs for N Sea oil.
Increase in Industry:
 Increase in technology – mass production – Everybody can afford cars so there is a bigger demand.
 Rural – urban migration
 Better methods of power – steam
 Multiplier effect – Supplying industries.
Decrease in Industry:  Cheaper labour abroad – LEDCs & NICs e.g. Taiwan.
 Mechanisation so less jobs
 Changing location of markets. – TNCs in Asia
 Cheaper imports e.g. electronics from the Far East.
 Effect of governments & TNCs but had some good points.
 Better transport so lower transport costs.
Tertiary Increasing:  Services always needed
 More time & money available for leisure – Disposable income
 More services needed to support other services & industry.