Understanding the Tertiary Sector: A Comprehensive Guide
Unit 4. The Tertiary Sector
1. The Tertiary Sector and Its Activities
1.1. Evolution of the Service Economy
The tertiary sector plays a crucial role in the global economy, with its importance varying based on a country’s economic development. Developed and developing countries exhibit significant differences in the quantity and quality of services offered.
Developed Countries:
In developed countries with high Human Development Index (HDI) rankings, services are concentrated in large urban and tourist areas, employing over 60% of the workforce. Major cities like Madrid and Paris see over 80% employment in this sector. The high quality of services contributes significantly to the population’s well-being.
Developing Countries:
Developing countries have less than 30% of their workforce engaged in the tertiary sector, primarily in government jobs or low-productivity activities like street vending. Social services are often inadequate, with limited access to healthcare and education.
GDP and HDI
Gross domestic product (GDP) measures the total value of goods and services produced by a country, while the Human Development Index (HDI) assesses life expectancy, health, education, and standard of living.
1.2. Public and Private Activities
- Public Services: Created and managed by the government to ensure essential services for the population, forming the basis of the welfare state.
- Private Services: Established and operated by private companies for profit, such as newspapers.
1.3. Financialisation of the Economy
Banking and finance play a vital role in providing services like secure money storage and loans for businesses. While not employing a large workforce, these activities are crucial for the overall economy.
The growth of financial services has contributed to economic instability and a series of crises since 1990, culminating in the 2007 financial crisis and subsequent global economic depression.
2. Healthcare and Education
2.1. Healthcare
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2.2. Education
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3. Transport and Communications
3.1. Transport
- Rail Transport: Dominant in the 19th and early 20th centuries due to speed and capacity, railways remain essential for goods and passenger transport.
- Road Transport: With the rise of car ownership in the mid-20th century, road networks and vehicles have expanded, making it ideal for short-distance, lightweight goods transport.
- River and Sea Transport: River transport is limited, while sea transport is cost-effective for heavy goods, with passenger traffic mainly consisting of ferries and cruise ships.
- Air Transport: The preferred mode for long-distance travel.
3.2. Communications
Mass media (print, radio, television, and web-based media) disseminates entertainment, information, and opinions globally. Telecommunications, encompassing long-distance communication systems, experienced significant growth in the 20th century and continues to evolve.
The development of portable telephones (mobiles) and computer networks (the Internet) has been instrumental in this ‘communications revolution’.
The Global Village
Technology and the constant flow of information have transformed the world into a ‘global village’.
4. Commerce
4.1. General Characteristics
Commerce encompasses all economic activities that connect producers and consumers through the buying and selling of goods and services.
Key features of modern commerce include:
- Driven by the principles of supply and demand.
- Concentrated in urban environments.
- Increasing importance of multinational companies in international trade.
- Growth in developed economies fueled by consumer and business consumption and production.
- Mix of high-level and low-level transactions in developing economies.
- Reinforced by marketing practices like advertising and communication campaigns.
- Emergence of new business models like e-commerce.
4.3. Domestic Trade
Domestic trade occurs within a country’s borders and can be categorized as:
- Wholesale Trade: Involves large quantities of merchandise sold to other merchants or companies.
- Retail Trade: Involves buying from wholesalers and selling directly to consumers.
Retail outlets include:
- Street markets and street vending.
- Traditional retailers.
- Large retail outlets (hypermarkets, supermarkets, shopping centers).
4.4. Foreign Trade
Foreign trade involves the exchange of goods and services between countries, encompassing exports (goods and services sold to foreign countries) and imports (goods and services brought into the country).
- Positive Balance of Trade: When the value of exports exceeds imports, creating a trade surplus.
- Negative Balance of Trade: When the value of imports exceeds exports, creating a trade deficit.
A country’s balance of trade and all economic transactions with the rest of the world constitute its balance of payments.
Countries form organizations and trade blocs to facilitate trade and promote the free movement of goods and services. The World Trade Organization (WTO) ensures compliance with trade agreements, resolves trade conflicts, and fosters international trade.
5. Tourism
5.1. The Tourism Industry
Tourism involves the temporary movement of people for leisure purposes. The tourism industry requires infrastructure like airports, roads, accommodation, and restaurants to meet demand. Seasonality is a key characteristic of this industry.
5.2. Repercussions of Tourism
- Significant source of revenue for countries.
- Job creation, often temporary due to seasonality.
- Improved cultural relations between countries.
- Potential for environmental damage.
- Unequal distribution of revenue, with developed countries often benefiting more than developing destination countries.
5.3. Major Areas of Tourist Traffic
Regions with temperate climates, rich cultural heritage, or pristine natural landscapes attract the most tourists.
Ecological Footprint: Measures the impact of human activities on the environment in terms of the land and water required to produce consumed goods and assimilate waste.
Sustainable Development: Development that meets present needs without compromising the ability of future generations to meet their own needs. It involves environmentally friendly initiatives, reduced resource exploitation, increased use of renewables, and investments in beneficial technologies.