Classification of Industry

All jobs can be placed into one of the broad economic sectors: primary, secondary, tertiary, quarternary and quinary.

  • The primary sector directly exploits natural resources and is closely linked to nature. (basic production such as agriculture, forestry, mining and fishery)
  • The secondary sector (such as sugar beet refining or iron industries) involves manufacturing or processing goods from raw materials.
  • The tertiary sector provides services to the population (such as trade, banking, transport, education and healthcare)
  • The quarternary sector involves research and development (eg. information technology).
  • The quinary sector is top level management and decision-making (eg. CEO’s in a company or politics)

Often the quarternary industry and quinary industry are considered to be part of the tertiary sector.

Formal and informal sector

Formal employment: refers to employment where the employee has a formal contract, fixed work conditions and responsibilities, a fixed salary, set hours of work and legal protection. Formal employment is covered by a social security for health and life risks and is capital incentive.

Informal employment: refers to jobs without a contract, with unregulated hours and pay-exploitation, no social security system, no qualifications. Informal employment is labour incentive and includes some illegal businesses.

Employment structure in the industries

As a country develops from an LEDC to an MEDC, employment in the primary sector decreases, employment in the tertiary sector increases and employment in the secondary sector increases (before falling back to almost the initial value).

employment structure
Employment in primary, secondary and tertiary industries

Inputs, processes, outputs

Industries have inputs, processes and outputs.

  • Inputs are the raw materials that are to be used in the process to create an output.
  • Processes are the actions that convert raw materials to finished goods.
  • Outputs are the finished products and wastes obtained from manufacturing, processing, or other actions of conversion.

Factors that affect industrial location

Raw materials – industries with bulky raw materials – such as iron ore or coal – are usually located near the source of the input, as this reduces transport costs. eg. Coal industries are usually near coal mines (or alternatively close to ports that import coal).

Energy and water supply – Manufacturing industries that rely on large amouts of power or high quantities of water are often located in areas that provide cheap access.

Labour supply – factories are likely to locate where there are enough people seeking employment. Depending on the industry this may be a pool of unskilled labour, a large specialised workforce or a small highly skilled workforce.

Market – Companies that produce bulky materials prefer a site near their market, as this reduces the cost of transport.

Transport – Locations near major transport routes are often favoured by manufacturing and processing industries as these allow the import of raw materials and the export of finished goods.

Kultur, Zuckerrüben, Normandie, Frankreich, Heap, Feld
Sugar beets

eg. Sugar beet refining.

The raw materials (sugar beet) will influence the location of the sugar beet refineries to a great extent, as most sugar beet refineries are located near near sugar beet farms. This is because large amounts of sugar beet are required for production and transport costs can be saved by locating near sugar beet farms. Also, sugar beets are more bulky than refined sugar, as weight is lost in processing. Sugar beet refineries are not usually near a market, as the refined sugar is sold worldwide.

Manufacturing industries

Possible reasons for the decrease in employment in (manufacturing) industries

  • Competition from abroad
  • Impacts of mechanisation/technological advancements
  • Factories relocate abroad as it is cheaper to produce overseas

Effects of decrease in manufacturing industries

  • Economic decline of a country due to less taxation
  • Less money to invest in public services such as transport/ healthcare
  • Unemployment which may lead to poverty
  • Shops may close down
  • Less atmospheric pollution from industrial discharge
  • Employment opportunities in other sectors
  • People who seek employment may emigrate

Footloose and High tech industries

Footloose industries: do not depend on a particular location, as they are not reliant on raw materials, energy/water supply, transport etc.

Most footloose industries:

  • use light small components
  • produce small products
  • use electricity as their power source
  • rely on a small skilled labour force
  • are usually non-polluting

High technology industries: refers to industries that produce the most advanced and most recent technology available

Computers chips circuits free stock image
Computer chips, high-tec product


Most high technology industries:

  • have advanced manufacturing techniques
  • use processing technologies that involve the use of microelectronics
  • tend to produce high value products
  • employ a skilled workforce
  • invest in research and development

High technology industries are usually regarded as footloose industries, as they can transport their components easily and thus do not rely on locations near raw materials or markets.

Multinational Corporations (MNC’s)

Multinational corporations or transnational corporations (TNC’s) are companies that produce or sell products or are located in more than one country.

Multinational corporations usually have factories in poorer countries because these provide a cheaper source of labour and lower production costs. The headquaters of MNC’s are commonly in richer countries, as there are more people in with administrative skills due to higher levels of education.

Advantages of MNC’s:

  • Create jobs in all the countries they are located in
  • Invest in improving the local infrastructure
  • Bring new skills and technologies to poorer countries
  • Provide employees with a reliable income

Disadvantages of MNC’s:

  • Employees in poorer countries may be paid lower wages than their counterparts in wealthier areas and may have to work in poor conditions (long hours, poor safety standards)
  • Profits return to country in which headquarters are located, rather than being invested in development
  • Insecure jobs- MNC’s could relocate any time

Linkage and Agglomeration

Aerial view of Silicon Valley, an agglomeration of high tech industries

Linkage is when one industry depends on the output of another. For example, the milk industry and leather production rely on cattle herding.

Agglomeration is a concentrartion of liked industries in one area.