What is the Tertiary Industry
The tertiary industry is the segment of the economy that provides services to its consumers, including a wide range of businesses such as financial institutions, schools and restaurants. It is also known as the tertiary sector or service industry/sector. The tertiary industry is one of three industry types in a developed economy, the other two being the primary, or raw materials, and secondary, or goods production, industries. As an economy becomes more developed, it shifts its focus from primary to secondary and tertiary industries.
BREAKING DOWN Tertiary Industry
The tertiary industry is split into two main categories. The first is made up of companies in the business of making money, such as those in the financial industry. The second comprises the nonprofit segment, which includes services such as state education. The tertiary industry sector, which makes up the vast majority of employment opportunities, is solely focused on providing services, not goods, to consumers and other organizations. Hence, it is also known as the service sector. This is in contrast to the primary industry, which produces raw materials, and the secondary industry, which takes raw materials and uses them to produce salable consumer goods. The term can be used to describe a single service-oriented organization or the industry segment as a whole.
Examples of Tertiary Industry Organizations
The tertiary industry provides services, as well as operational frameworks for business operations. This can include organizations involved in the shipping and transportation industry, such as railroad or trucking, when their sole focus is the process of moving goods. It could also include the transportation of people, such as taxi services, city bus systems and subways.
Traditional hospitality industries, such as hotels and resorts, are a part of the tertiary industry, as well as food service providers, such as restaurants. All services received from financial institutions, such as banks and investment brokers, are tertiary in nature. Personal services, including everything from hair cutting to tattooing, can be included along with services to animals, such as pet groomers, animal breeders and stray animal care facilities. Hospitals, clinics, veterinarian and other medical service facilities may also qualify.
Pricing Challenges in the Tertiary Industry
Selling services can often be challenging compared to selling a specific product. Since goods are tangible, it’s easy to peg a price to it. But being intangible, it can be difficult to put a value on a specific service. In these cases, the quality of service depends on the quality of the person providing it, and that can vary given people’s skills and personalities. For example, when two different brokers provide seemingly identical services, how can a consumer choose between them?
Transition From Tertiary to Quaternary
Certain technological services were previously considered tertiary, though some have determined it is appropriate to have them categorized into a new segment due to industry growth. These technological services include telecommunications providers, cable companies and internet providers. Even though these are all service-oriented, like the tertiary sector, the services have been separated and classified into the quaternary industry sector.
Who Has the Highest Output of Tertiary Services?
According to the International Monetary Fund (IMF) and the CIA World Factbook, the following countries are considered to be the largest by service or tertiary output as of 2016:
- United States: $14.76 billion
- China: $5.7 billion
- Japan: $3.5 billion
- Germany: $2.4 billion
- United Kingdom: $2.1 billion
- France: $1.9 billion
- Italy: $1.4 billion
- Brazil: $1.3 billion
- Canada: $1.1 billion
- India: $1.0 billion