Information about Three Sector Hypothesis

The three-sector hypothesis is an economic theory which divides economies into three sectors of activity: extraction of raw materials (primary), manufacturing (secondary), and services (tertiary). It was developed by C. Clark and Jean Fourastié.

According to the theory the main focus of an economy's activity shifts from the primary, through the secondary and finally to the tertiary sector. Fourastié saw the process as essentially positive, and in The Great Hope of the Twentieth Century he writes of the increase in quality of life, social security, blossoming of education and culture, higher level of qualifications, humanisation of work, and avoidance of unemployment.

Countries with a low per capita income are in an early state of development; the main part of their national income is achieved through production in the primary sector. Countries in a more advanced state of development, with a medium national income, generate their income mostly in the secondary sector. In highly developed countries with a high income, the tertiary sector dominates the total output of the economy.

Incorrect predictions of the hypothesis

Though various empirical studies appear to support the three-sector hypothesis, four inaccurate predictions can be identified in Fourastié's The Great Hope of the Twentieth Century:

1. According to Fourastié, the transition from the secondary to the tertiary sector should eliminate unemployment, since in his view the tertiary sector is unlimited in size. As his theory appeared in the 1930s, however, he did not take into account the enormous technological developments that would transform the service sector, for example the invention of computers.
2. Fourastié believed that there would be no states in which the secondary sector remained strongly represented even after a highly developed third phase had been reached. A counter-example is the Federal Republic of Germany. Although the secondary sector in Germany has sharply diminished since the 1950s, it has not fallen to the level predicted by Fourastié. The reasons for this lie in Germany's extremely high export rate.
3. Fourastié believed that the tertiary sector would always require an extremely high level of education of the workforce. However this is not the case. Since the tertiary sector is often equated with the service sector, it also includes jobs such as bootblacks, street sweepers and bellboys. The theory that an extremely high level of education must be reached to be able to work in the service sector is refuted by examples such as these.
4. Fourastié believed that workers' wages would be harmonised at a high level in tertiary economies, but this has not happened. In fact the change has been in the opposite direction: the wage gap is continually increasing in most OECD countries.

Fourastié described the tertiary sector - which as a rule is equated with the service sector - as a production sector with little or no technological development and therefore only modest gains at best in productivity. However the equivalence of the service sector and the tertiary sector is today only valid in a few cases. Therefore the creation of a new quaternary sector based on information, and the evolution from a post-industrial service society to an information society, are among the ideas often promoted today.

The terminology of first, second and third sector is today often used to distinguish between the (production-oriented) domestic economy (first sector), the state (second sector), and non-profit organisations (third sector), rather than in the way described above.

Structural transformation according to Fourastié

The distribution of the workforce among the three sectors progresses through different stages as follows, according to Fourastié:

First phase: Traditional civilisations

Workforce quotas:

• Primary sector: 70%
• Secondary sector: 20%
• Tertiary sector: 10%

This phase represents a society which is scientifically not yet very developed, with a negligble use of machinery. The state of development corresponds to that of European countries in the early Middle Ages, or that of a modern-day developing country.

Second phase: Transitional period

Workforce quotas:

• Primary sector: 20%
• Secondary sector: 50%
• Tertiary sector: 30%

More machinery is deployed in the primary sector, which reduces the number of workers needed. As a result the demand for machinery production in the second sector increases. The transitional phase begins with an event which can be identified with industrialisation: far-reaching mechanisation (and therefore automisation) of manufacture, such as the use of conveyor belts.

The tertiary sector begins to develop, as do the financial sector and the power of the state.

Third phase: Tertiary civilization

Workforce quotas:

• Primary sector: 10%
• Secondary sector: 20%
• Tertiary sector: 70%

The primary and secondary sectors are increasingly dominated by automisation, and the demand for workforce numbers falls in these sectors. It is replaced by the growing demands of the tertiary sector. The situation now corresponds to modern-day industrial societies and the society of the future, the service or post-industrial society. Today the tertiary sector has grown to such an enormous size that it is sometimes further divided into an information-based quaternary sector (see above), and even a quinary sector based on non-profit services.

Source

Much of this article is translated from the of May 8th 2007

See also

• Jean Fourastié
• Primary sector of industry
• Secondary sector of industry
• Tertiary sector of industry
• Quaternary sector of industry
• Quinary sector of industry

Further reading

• Bernhard Schäfers: Sozialstruktur und sozialer Wandel in Deutschland. (Social structure and social change in Germany) Lucius und Lucius, Stuttgart 7th edition 2002
• Rainer Geißler: Entwicklung zur Dienstleistungsgesellschaft. In: Informationen zur politischen Bildung. (Information for political education) Nr. 269: Sozialer Wandel in Deutschland/2000 (social change in Germany), p. 19f.
• Jean Fourastié: Die große Hoffnung des 20. Jahrhunderts. (great hope of the 20iest century) Köln-Deutz 1954
• Hans Joachim Pohl: Kritik der Drei-Sektoren-Theorie. In: Mitteilungen aus der Arbeitsmarkt- und Berufsforschung. (notices from the work market and profession research) Heft 4/year 03/1970, p. 313-325
• Stefan Nährlich: Dritter Sektor: "Organisationen zwischen Markt und Staat." (organizations between maket and state). from the sequel: "Theorie der Bürgergesellschaft" des Rundbriefes Aktive Bürgerschaft ("Theory of the civil society" of the newsletter active civil society) current 4/2003
• Uwe Staroske: Die Drei-Sektoren-Hypothese: Darstellung und kritische Würdigung aus heutiger Sicht (the Three-sector-hypothesis: presentation and critical honoration from a contemporary view). Roderer Verlag, Regensburg 1995

Economics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Greek for oikos (house) and nomos (custom or law), hence "rules of the house(hold).
..... Click the link for more information.

Economic systems

Ideologies and Theories
Primitive communism
Capitalist economy
Corporate economy
Fascist economy
Laissez-faire
Mercantilism
Natural economy
Social market economy
Socialist economy
Communist economy


..... Click the link for more information.

The secondary sector of industry includes those economic sectors that create a finished, usable product: manufacturing and construction. This sector of industry generally takes the output of the primary sector and manufactures finished goods or products to a point where they are
..... Click the link for more information.

Economic systems

Ideologies and Theories
Primitive communism
Capitalist economy
Corporate economy
Fascist economy
Laissez-faire
Mercantilism
Natural economy
Social market economy
Socialist economy
Communist economy


..... Click the link for more information.

This article requires authentication or verification by an expert.
Please assist in recruiting an expert or [ improve this article] yourself. See the talk page for details. This article has been tagged since April 2007.
..... Click the link for more information.

economy is the system of human activities related to the production, distribution, exchange, and consumption of goods and services of a country or other area.

The composition of a given economy is inseparable from technological evolution, civilization's history and social
..... Click the link for more information.

All Movie Guide profile
IMDb profile

Quality of Life is a 2004 drama film, telling the fictional story of two graffiti writers in the Mission District of San Francisco.
..... Click the link for more information.

worldwide view.

Unemployment is the state in which a worker wants, but is unable, to work. The unemployment rate is the number of unemployed workers divided by the total civilian labor force.
..... Click the link for more information.

Per capita income means how much each individual receives, in monetary terms, of the yearly income that is generated in their country through productive activities. That is what each citizen would receive if the yearly income generated by a country from its productive activities
..... Click the link for more information.

Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. They use a system of national accounts or national accounting first developed during the 1940s.
..... Click the link for more information.

Measures of national income and output are used in economics to estimate the value of goods and services produced in an economy. They use a system of national accounts or national accounting first developed during the 1940s.
..... Click the link for more information.

Centuries: 19th century - 20th century - 21st century

1900s 1910s 1920s - 1930s - 1940s 1950s 1960s
1930 1931 1932 1933 1934
1935 1936 1937 1938 1939

- -
- The 1930s
..... Click the link for more information.

computer is a machine which manipulates data according to a list of instructions.

Computers take numerous physical forms. The first devices that resemble modern computers date to the mid-20th century (around 1940 - 1941), although the computer concept and various machines
..... Click the link for more information.

Anthem
"Das Lied der Deutschen" (third stanza)
also called "Einigkeit und Recht und Freiheit"
..... Click the link for more information.

worldwide view.

2nd millennium
Centuries: 19th century - 20th century - 21st century

1920s 1930s 1940s - 1950s - 1960s 1970s 1980s
1950 1951 1952 1953 1954
1955 1956 1957 1958 1959

- -
- The 1950s
..... Click the link for more information.

worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page.

In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade.
..... Click the link for more information.

Income disparity or wage gap is a term used to describe inequities in average pay or salary between socio-economic groups within society, or the inequities in pay between individuals who produce the same work.
..... Click the link for more information.

The Organisation for Economic Co-operation and Development (OECD), (in French: Organisation de coopération et de développement économiques; OCDE) is an international organisation of thirty countries that accept the principles of representative democracy and a free
..... Click the link for more information.

Economic systems

Ideologies and Theories
Primitive communism
Capitalist economy
Corporate economy
Fascist economy
Laissez-faire
Mercantilism
Natural economy
Social market economy
Socialist economy
Communist economy


..... Click the link for more information.

post-industrial society is a society in which an economic transition has occurred from a manufacturing based economy to a service based economy, a diffusion of national and global capital, and mass privatization.
..... Click the link for more information.

An information society is a society in which the creation, distribution, diffusion, use, and manipulation of information is a significant economic, political, and cultural activity.
..... Click the link for more information.

machine (derived from the latin machina) is any device that transmits or modifies . In common usage, the meaning is restricted to devices having rigid moving parts that perform or assist in performing some work.
..... Click the link for more information.

Middle Ages form the middle period in a traditional schematic division of European history into three "ages": the classical civilization of Antiquity, the Middle Ages and Modern Times.
..... Click the link for more information.

developing country has a relatively low standard of living, an undeveloped industrial base, and a moderate to low Human Development Index (HDI) score. In developing countries, there is low per capita income, widespread poverty, and low capital formation.
..... Click the link for more information.

Industrialisation (also spelt Industrialization) or an Industrial Revolution is a process of social and economic change whereby a human group is transformed from a pre-industrial society (an economy where the amount of capital accumulated per capita is low) to an
..... Click the link for more information.

belt conveyor consists of two pulleys, with a continuous loop of material - the conveyor belt - that rotates about them. One or both of the pulleys are powered, moving the belt and the material on the belt forward.
..... Click the link for more information.

Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects.
..... Click the link for more information.

The quinary sector of industry is the sector of industry suggested by some geographers as comprising health, education, culture, research, police, fire service, and other government industries not intended to make a profit.
..... Click the link for more information.

This article requires authentication or verification by an expert.
Please assist in recruiting an expert or [ improve this article] yourself. See the talk page for details. This article has been tagged since April 2007.
..... Click the link for more information.

Economic systems

Ideologies and Theories
Primitive communism
Capitalist economy
Corporate economy
Fascist economy
Laissez-faire
Mercantilism
Natural economy
Social market economy
Socialist economy
Communist economy


..... Click the link for more information.