Three Sector Hypothesis

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The three-sector hypothesis is a theory in economics that divides the economy into raw material extraction , raw material processing and service . It was worked out by the British economists Allan GB Fisher (1935) and Colin G. Clark (1940).

General

Clark relied on a statement by Sir William Petty published in 1690. This is why this hypothesis is sometimes called Petty's Law . In Germany she became more widely known through the translation of a work by the French economist Jean Fourastié .

statement

The three-sector hypothesis describes that the focus of economic activity initially shifts from the primary economic sector (raw material extraction) to the secondary sector (raw material processing) and then to the tertiary sector (services). Fourastié is extremely optimistic and speaks in one of his books about increasing prosperity , social security , the flourishing of education and culture , higher qualification levels , the humanization of work and the avoidance of unemployment .

Countries with a low per capita income show a low level of development. The gross domestic product is generated from the primary (that of agricultural production) and the tertiary sector (that of services in the field of tourism ). The foreign exchange income from the service sector always plays a dominant role in contrast to the income from the primary sector. Progressively developed countries with average per capita income, so-called emerging economies , generate their income predominantly in the secondary sector, whereby it must be shown that in the last 20 to 30 years there has also been a shift in economic activities in the emerging economies. The number of employees and their added value stagnate in the primary sector. On the other hand, there is a positive increase in both the number of employees and their income in the tertiary sector, as more income is generated due to the restructuring into tourism. In highly developed, high-income countries, the tertiary sector has a dominant share of employment in total income.

Use the number of employed persons, or the share of the gross national product (GNP) in the various sectors of the economy can be seen that Germany by the end of the 19th century an agrarian society , and until the 1970s of the 20th century an industrial society was. The tertiary sector gained exponentially in importance from the middle of the 20th century and soon rose above that of the secondary sector in terms of added value. Since then, one can speak of a service society in Germany .

Structural change according to Fourastié

Development of the three economic sectors according to Fourastié

Basic assumptions for development

To summarize according to Jean Fourastié:

  1. In the primary and secondary sectors - unlike in the tertiary sector - fewer and fewer workers are required due to the increase in productivity through technical progress (p. 64 ff.).
  2. A market saturation occurs the fastest one for products of the primary sector, then where the secondary sector, while the demand by which the tertiary sector is unlimited and remains (p 86 ff.).
  3. General prosperity leads to a shift in values: time becomes more valuable, education and individualization increase, and with it the demand for services (p. 274 f).
  4. Technical progress leads to the “spiritualization of work”, since more preparation, organization and planning and less manual activity are required in production too ; accordingly, the need for labor for production-related services will increase (p. 276 f.).

Shift in the employment rate

The shift in the employment rate within the individual economic sectors in different phases according to Jean Fourastié:

First phase: traditional civilizations

Number of employees:

  • Primary sector: 70%
  • Secondary sector: 20%
  • Tertiary sector: 10%

This phase represents a society that is not yet well developed. Agriculture is largely subsistence and one can hardly speak of the use of machines. The level of development corresponds to that of European states in the early Middle Ages or that of a developing country.

Second phase: transition period

Number of employees:

  • Primary sector: 20%
  • Secondary sector: 40%
  • Tertiary sector: 40%

More and more machines are used in the primary sector; this reduces the need for labor. As a result, the demand for machines that are produced by the secondary sector is increasing. The transition phase begins with an event or process that can be equated with industrialization: advancing mechanization or automation, assembly line production , manufacture, etc.

Numerous synergy effects began to develop with the development of industrialization. These were, for example, a strong banking and credit system, administrative facilities, technology and research centers as well as universities and start-up centers that were in cooperation with large companies in the leading economic sectors. Institutions in the tertiary sector, that of services, are becoming more and more relevant.

Third phase: Tertiary civilization

Employment figures:

  • Primary sector: 10%
  • Secondary sector: 20%
  • Tertiary sector: 70%

The primary and secondary sectors are more and more subject to automation and the need for labor is falling. The need for this in the tertiary sector is increasing. We are in the society of the future, a service society . Nowadays the tertiary sector has increased so enormously that it has started to be subdivided; thus the Quaternary Sector was formed, which is mainly concerned with information.

criticism

Various empirical studies seem to confirm the three-sector hypothesis, but employment in the primary sector fell far more than Fourastié predicted. For Germany in 2014, the Federal Statistical Office shows the following proportions for 2014: primary sector 1.5%, secondary sector 24.6% and tertiary sector 73.9%. In the end, four false prognoses can be seen in Fourastié's book:

  1. Fourastié said that the transition from the secondary to the tertiary sector would eliminate the problem of unemployment, since in his opinion this sector could not be rationalized. When he set up his theory in the 1930s, however, he had no idea of ​​the enormous technical progress in the service sector, which for example the invention of the computer brought with it (see digital revolution ).
  2. Fourastié's false prognosis states that there will be no state in which the secondary sector will still be very strongly represented, even though it is a highly developed state in the third phase. The best counterexample is Germany. In the German economy , the secondary sector has declined sharply since the 1950s, but not quite to the level that Fourastié predicted. The reasons for this lie in Germany's extremely high exports.
  3. Fourastié's false prognosis states that the tertiary sector would always place high educational demands on employees. However, this is not the case. The service professions also include cleaning staff , shoe shine , parcel delivery service and lift boys .
  4. Incorrect prognosis: The high level of income adjustment predicted by Fourastié did not occur, rather the opposite development can be observed: the inequality of income distribution is increasing in most of the OECD countries .

Fourastié described the tertiary sector - which is usually equated with the service sector - as a production sector with little or no technical progress and thus at most a small increase in labor productivity. The assignment of the service sector to this tertiary sector is tenable today only in a few areas. Therefore, among other things, the addition of a fourth sector “information sector” is propagated and a development towards an information society ( knowledge society ) instead of a service society is forecast.

See also

literature

  • Bernhard Schäfers: Social Structure and Social Change in Germany. 7th edition. Lucius and Lucius, Stuttgart 2002.
  • Rainer Geißler: Development towards a service society. In: Information on political education. No. 269, 2000, pp. 19f.
  • Jean Fourastié: The Great Hope of the 20th Century. Cologne-Deutz 1954.
  • Hans Joachim Pohl: Critique of the three-sector theory . (PDF file; 360 kB) In: Communications from labor market and occupational research. Vol. 3, 1970, No. 4, pp. 313-325.
  • Oscar W. Gabriel : Are we on the way to a post-industrial society? : Speculation and facts. In: Political Education. Vol. 17, 1984, No. 3, pp. 69-86.
  • Uwe Staroske : The three-sector hypothesis: presentation and critical appraisal from today's perspective. Roderer Verlag, Regensburg 1995.

Individual evidence

  1. ^ Allan GB Fisher: The clash of progress and security . Macmillan, London 1935.
  2. ^ Colin G. Clark: The conditions of economic progress . Macmillan, London 1940.
  3. ^ William Petty: Political Arithmetick or a Discourse Concerning, The Extent and Value of Lands, People, Buildings: Husbandry, Manufacture, Commerce, Fishery, Artizans, Seamen, Soldiers; Publick Revenues, Interest, Taxes, Superlucration, Registries, Banks, Valuation of Men, Increasing of Seamen, of Militia's, Harbors, Situation, Shipping, Power at Sea, & c. As the same relates to every Country in general, but more particularly to the Territories of His Majesty of Great Britain, and his Neighbors of Holland, Zealand, and France . London 1690.
  4. ^ Y. Murata: Engel's law, Petty's law, and agglomeration. In: Journal of Development Economics. 87, 2008, pp. 161-177.
  5. ↑ a b c d Jean Fourastié: Le Grand Espoir du XXe siècle. Progrès technique, progrès économique, progrès social . Presses Universitaires de France, Paris 1949 = The great hope of the 20th century . Cologne 1954.
  6. ↑ Overall Economy & Environment - Labor Market - Labor Market - Federal Statistical Office (Destatis). In: www.destatis.de. Retrieved January 16, 2017 .