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Exposicion Development

The document summarizes the three sector model of economic development which proposes that economies transition through primary, secondary, and tertiary sectors as they develop. It describes each sector and explains the drivers of change between them as productivity increases.

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Andrés Vázquez
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29 views3 pages

Exposicion Development

The document summarizes the three sector model of economic development which proposes that economies transition through primary, secondary, and tertiary sectors as they develop. It describes each sector and explains the drivers of change between them as productivity increases.

Uploaded by

Andrés Vázquez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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First of all, I am going to explain the biography of

the authors who have carried out this theory


John Bates Clark (January 26, 1847 – March 21, 1938) was an American neoclassical economist.
He is known for being one of the pioneers of Marginalism and for opposing Institutional
Economics. He is also known for the John Bates Clark Medal, awarded to any American under
the age of forty who has made a major contribution to economic thought and knowledge, in
his honor.

Irving Fisher (February 27, 1867, Saugerties, New York - April 29, 1947, New York) was an
American economist, statistician, inventor, and eugenicist who helped spread neoclassical
economic ideas in the United States.

Several concepts take their name from him, such as Fisher's equation, Fisher's hypothesis,
Fisher's rate, and Fisher's separability theorem.

Next I will explain in detail what the theory consists of

This theory, also known as modernization theory, is based on the ideas contributed by Colin
Clark (1940) and Allan Fisher (1939) on the growth of per capita income, the distribution of
employment between primary, secondary and tertiary activities and the processes of
industrialization and outsourcing. Its center of attention is the internal relations of an
economy, giving less importance to its relations with the outside. The explanation of the
process of internal growth is given by the very evolution of the division of labor in said
economy. The changes in the relative importance of the three large productive sectors in the
processes of economic growth were considered, not only as something that was directly
related to the different elasticity of demand when per capita income increases occurred, but
also as the main dynamic indicator of economic development.

According to these authors, the following phases can be determined in the history of any
growth process:

(siguiente diapositiva)

1) Primary production:
- A phase based on traditional agrarian society, with a subsistence and self-sufficient
economy.
- Is related to activities of extracting raw materials through agriculture, mining,
fishing, and forestry.
- Low income countries are assumed to be dominated by primary production.
- These are relatively primitive economics.

(siguiente diapositiva)

2) Secondary production:
- A phase of growth produced by the specialization of production in primary
activities, interregional trade and improvements in transport infrastructure.
- Is related to the growth of manufacturing and construction sectors.
- Middle income countries are often dominated by secondary production.
- To fulfill the growing demand in industrial goods.
- Leeds to the decrease of agriculture sector.

(siguiente diapositiva)

3) Tertiary production (services)


- A phase of take-off of the industrial sector, linked to the elaboration of primary
products (agricultural, forestry and mining) and to the needs derived from a
growing population, which is normally linked to employment of foreign capital and
know-how.

Is concerned with the provision of services, such as:


- Education
- Healthcare
- Financial services
- Tourism

This sector dominates in high-income countries.

(siguiente diapositiva)

This change is driven by an increase in productivity per employee

- Increased productivity in agriculture frees people to work manufacturing-

- Increased manufacturing productivity and increased income means people that people
spend proportionally les on agricultural goods,

- And then less on manufacturing goods than on services

(siguiente diapositiva)

4) Quaternary:

Maturity phase, created by the greater interrelationships of the productive sectors, the
diversification of industrial activity (production of capital goods and intermediate and
specialized inputs), the increase in the level of income (with the consequent change in
consumption habits) and the appearance of new activities.

- It is an extensión of the three sector hypothesis of industry.


- It principally concerns the intelectual services:
- Information generation
- Information sharing
- Consultation
- Education

It is sometimes incorporated into the tertiary sector but some argue that intelectual services
are distinct enough to warrant a separet sector.

This sector evolves in well develop countries and requires a highly educated workforce.

(CONCLUSIÓN FINAL)

HOWEVER, THERE ARE CRITICISM TOWARDS THIS MODEL


- - There are many LDCs where the main sector is a service sector, without having a
properly development secondary sector.

Examples:

- Kenya: tourism
- Malta: tourism, financial services
- Cyprus: tourism, financial services
- Hong Kong: financial services

The model ignores the international economic context, not taking into account the import of
manufactured goods.

Thank you for your attention

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