ntrod tion 1.13
Consensus for their robust growth. The Keynesian banking, insurance, transportation, tourism, etc.
idea of ‘interventionist state’ seems the ultimate This sector is also known as the services sector.
alternative in the present times, as is suggested
by the US Nobel economist Paul Krugman and typEs of EconomiEs
being followed by the Japanese Prime Minister,
Depending upon the shares of the particular
Shinzo Abe (the Three Arrows of Abenomics).
sectors in the total production of an economy and
the ratio of the dependent population on them
sEctors of an Economy for their livelihood, economies are categorised as:
Every economy tries to maximise the returns
1. Agrarian Economy
of economic activities in which it is involved.
Whatever be the organising principles of an An economy is called agrarian if its share of the
economy, the economic activities are broadly primary sector is 50 per cent or more in the total
classified into three broad categories, which are output (the GDP) of the economy. At the time of
known as the three sectors10 of the economy. Independence, India was such an economy. But
now it shows the symptom of a service economy
1. Primary Sector with the primary sector’s contribution falling
This sector includes all those economic activities to almost 18 per cent of its total produce, while
where there is the direct use of natural resources almost 49 per cent of the population depends
on the primary sector for their livelihood. Thus,
as agriculture, forestry, fishing, fuels, metals,
in monetary terms India is no more an agrarian
minerals, etc. In some of the economies, mining
economy, however the dependency ratio makes
activities are considered as part of the secondary
it so—India being the first such example in the
sector, though we see direct use of natural
economic history of the world.
resources here. Broadly, such economies term
their agricultural sector as the primary sector. This 2. Industrial Economy
is the case in India.
If the secondary sector contributes 50 per cent or
2. Secondary Sector more to the total produce value of an economy, it
is an industrial economy. Higher the contribution,
This sector is rightly called the manufacturing higher is the level of industrialisation. The western
sector, which uses the produce of the primary economies which went for early industrialisation
sector as its raw materials. Since manufacturing earning faster income and developing early are
is done by the industries, this sector is also called known as developed economies. Most of these
the industrial sector—examples are production of economies have crossed this phase once the process
bread and biscuits, cakes, automobiles, textiles, of industrialisation saturated.
3. Service Economy
3. Tertiary Sector
An economy where 50 per cent or more of the
This sector includes all economic activities where produced value comes from the tertiary sector is
different ‘services’ are produced such as education, known as the service economy. First lot of such
economies in the world were the early industrialised
10. Michael P. Todaro and Stephen C. Smith, Economic
Development, Pearson Education, 8th Ed., N. Delhi, economies. The tertiary sector provides livelihood
p. 440. to the largest number of people in such economies.