What this lesson teaches
I can explain how global production shifts have changed the balance of agriculture, manufacturing and services.
Syllabus 9173, Topic 1.2, 1. Development. How might the structure of a country's economy be affected by shifts in global patterns of manufacturing, services and agriculture?
Make a guess
Agriculture's share of a country's economy falls from 40% to 15% over 50 years. Did its farms produce less food?
- No, not necessarily. Other sectors may have grown more.
- No, because a falling share shows the farms became more efficient.
- Yes, because the farmers moved to cities.
- Yes. A smaller share means less food.
Show the answer
No, not necessarily. Other sectors may have grown more.
A share can fall even when the amount rises. If farming became more productive while factories and services grew faster, output could still be higher.
A sector's share can fall because others grow faster, so a smaller share does not always mean it produces less.
Economic structure is the balance between different activities. The agricultural sector includes farming, forestry, fishing and hunting. The manufacturing sector turns raw materials into goods. The service sector does work for people or businesses, like transport, healthcare and finance. Catching fish is agriculture, canning it is manufacturing and selling the cans is a service.
Sort these
Which sector does each activity belong to?
Groups: Agricultural, Manufacturing, Service.
- Selling the canned fish in a supermarket
- Shipping goods between ports
- Turning harvested timber into furniture
- Assembling phones from imported parts
- Catching fish at sea
- Treating patients in a hospital
- Growing rice on a farm
- Canning the fish in a factory
Show the answer
Agricultural
- Catching fish at sea Taking a natural resource directly from nature is the agricultural sector, which includes fishing.
- Growing rice on a farm Farming crops is agriculture, the sector that also covers forestry and fishing.
Manufacturing
- Turning harvested timber into furniture Changing a raw material into a product is manufacturing.
- Assembling phones from imported parts Making finished products from components is manufacturing work.
- Canning the fish in a factory Turning raw materials into goods is manufacturing.
Service
- Selling the canned fish in a supermarket Doing work for customers, such as selling, is a service.
- Shipping goods between ports Transport is work done for businesses, so it is a service.
- Treating patients in a hospital Healthcare is work done for people, which makes it a service.
A sector's share can mean its share of jobs or of value added, the value it adds to production. Say which you mean. Many workers do not always mean a big share of value.
Since the 1950s, some countries, especially in East Asia, expanded manufacturing through exports and investment. Factory jobs and cities grew, and agriculture's share fell. But farm output can still rise, because farming became more productive. A smaller percentage is not always a smaller amount.
In many richer countries, services became more important. Some factories became too costly or moved abroad. Finance, logistics, education and healthcare grew. High-value manufacturing can remain.
The sectors are linked, not separate stages. A shift to services does not prove people live better. Farming needs finance, transport and processing, and factories need design and logistics. Not every country follows one fixed path, and service jobs range from well-paid professional work to insecure informal work.
- Three sectors
- Agriculture, manufacturing and services.
- Share vs total
- A falling share can hide rising output.
- Value added
- The value a sector adds to production.
Step by step
Check the measure
Share of jobs, or of value added?
Compare share and total
Did the amount actually fall?
Explain the shift
Competition, investment and productivity.
Worked example: A smaller share, more output
In a made-up economy, farming adds $20 billion out of $100 billion, then $30 billion out of $200 billion. Its share falls from 20% to 15%, but its value rises by $10 billion. Other sectors grew faster.
Watch out for this
A falling share for agriculture proves food production fell.
A share is relative. Check the actual output first.
Check your understanding
Manufacturing's share of jobs falls while its output rises. What could explain this?
- Many factories must have closed and moved abroad.
- Factories got more productive while other sectors added jobs.
- The two figures contradict each other, so one is wrong.
Show the answer
Factories got more productive while other sectors added jobs.
Yes. Both trends can happen together.