Unit 4. The tertiary sector.

1. The tertiary sector and its activities.

1.1. Evolution of the service economy

This sector plays an increasingly important role in the global economy. However, its relative weight depends on a country’s level of economic development. There are significant differences between developed and developing countries in terms of the quantity and quality of the services provided.

In developed countries, which rank high on the HDI, services tend to be located in large urban areas and tourist areas. They employ more than 60% of the working population. In major cities, like Madrid and Paris, the percentage employed by this sector is over 80%. The quality of the different services available gives the population a significant level of well-being.

In developing countries, the number of people who work in the tertiary sector is less than 30%. The majority of people working in this sector are employed by the government or are engaged in low productivity activities, such as street vending. Social services are of a poor quality and most people do not have access to healthcare or education.


Gross domestic product (GDP) is the total value of all the goods and services a country produces during a given period. The Human Development Index (HDI) is an indicator that measures life expectancy, health, education and standard of living.

1.2. Public and private activities

  • Public services: these are created and managed by the government in order to guarantee certain basic services to the general population, these are the services which are part of what is known as the welfare state or social welfare.
  • Private services: these are created and managed by private companies with the aim of obtaining financial benefits, such as a newspaper.

1.3. Financialisation of the economy

Banking and finance are very important services. Some of the services they provide include a secure system for storing money, as well as providing loans so people can do business and generate more money. These activities do not employ many people, but the rest of the economy depends on them.

The growth of financial has led to significant economic instability and a succession of economic crises since 1990. 2007 was the beginning of the greatest financial crisis since 1929, which caused a global economic depression.

2. Healthcare and education

2.1. Healthcare

2.2. Education

3. Transport and communications

3.1. Transport

  • Rail transport. From the early 19th century to the second half of the 20th century, railways were the main means of ground transport because of their speed and carrying capacity. Today they are heavily used for the transport of goods, as well as for passengers.
  • Road transport. Since car ownership became widespread in the mid- 20th century, the number of roads and vehicles has increased steadily. Today, this is the most suitable form of ground transport for lightweight goods over short distances.
  • River and sea transport. River transport is limited. Sea transport is ideal for transporting heavy goods at a low cost. Passenger traffic is limited to ferries and cruise ships.
  • Air transport. Air travel is the most common means of transport for long-distance journeys.

3.2. Communications

The mass media (print, radio, television and web-based media) transmit entertainment, information and opinions to every corner of the planet. Telecommunications are long-distance communications systems. This sector experienced spectacular growth during the 20th century and continues to do so today.

The development of portable telephones (mobiles) and computer networks (the Internet) has been especially important in making these advances possible. As with transport, this phenomenon is known as the ‘communications revolution’.


This concept presents the idea that the world has become a ‘global village’ thanks to technology and to the continuous information flow.

4. Commerce

4.1. General characteristics

Commerce includes all economic activities that are intended to connect producers and consumers through the buying and selling of goods and services.

Some characteristic features of commerce today:

  • It is governed by the principles of supply and demand.
  • In terms of location, it is physically concentrated primarily in urban environments.
  • Multinational companies are also increasingly important in international trade.
  • In developed economies, the growth of commerce is based on consumption by consumers, inhabitants and companies, and the significant production of goods and services.
  • In developing economies, there is a mixture of high level and low-level commercial transactions that range from international business deals between multinationals to street vending.
  • It is reinforced through marketing, practices intended to stimulate consumption. These include advertising, image, communications campaigns, etc.
  • It promotes new types of business, such as electronic commerce or e-commerce. This involves buying goods and services from distributors,

4.3. Domestic trade

Domestic trade takes place within the borders of a country. These exchanges can be divided into two basic groups:

  • Wholesale trade, which moves large quantities of merchandise in order to sell it to other merchants or companies.
  • Retail trade, which involves buying from wholesalers and selling directly to consumers.

Products are sold in establishments:

·Street markets and street vending: temporary stalls, stands or carts where sellers display and sell their goods.

  • Traditional retailers: shops located in urban areas which sell directly to consumers.
  • Large retail outlets: hypermarkets, supermarkets, shopping centres, etc.

4.4. Foreign trade

Foreign trade is the exchange of goods and services between a country and the rest of the world. There are two types of exchange: exports, which are the goods and services that are sold to foreign countries, and imports, which are the goods and services produced abroad and brought into the country.

  • Positive balance of trade: the value of exports exceeds the value of purchases, creating a surplus balance or trade surplus.
  • Negative balance of trade: the value of imports exceeds the value of sales, creating a deficit balance or trade deficit.

A country’s balance of trade and all economic transactions between that country and the rest of the world make up its balance of payments.

To facilitate trade, countries form organisations and trade blocs, which take action to stimulate the free movement of goods and services.

The World Trade Organization (WTO works to ensure fulfilment of trade agreements between member countries, resolve trade conflicts among them and promote international trade.

5. Tourism

5.1. The tourism industry

Tourism is the temporary movement of people from their place of residence to another place in order to enjoy their free time. Tourism is therefore related to leisure.

The development of the tourism industry involves creating the necessary transport and hospitality infrastructure to meet demand: airports, roads, accommodation, restaurants, etc. The main characteristic of the tourism industry is seasonal variation or seasonality.

5.2. Repercussions of tourism

  • It represents a significant source of revenue for a country.
  • It creates jobs, but many of them are temporary, due to seasonality.
  • It improves cultural relations between citizens of different countries.
  • Destroys natural landscapes.
  • In developing countries, the destination countries do not always get to keep the revenue generated. Instead, this money often goes to a developed country, where most of the major global tour operators are located.

5.3. Major areas of tourist traffic

Regions with temperate climates, significant cultural and artistic heritage or relatively untouched natural landscapes experience the highest levels of tourism.

Ecological footprint:the impact of human activities measured in terms of the area of biologically productive land and water required to produce the goods consumed and to assimilate the wastes generated. It is the amount of the environment necessary to produce the goods and services necessary to support a particular lifestyle.

Sustainable development:Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. Environmentally friendly initiative that is based on current and future needs, the reduction in exploitation of resources, increase in use of renewables, investments in meaningful and beneficial technologies, and promotes a change to modern governments and industry.