Modern Britain: An Economic and Social History

By Sean Glynn; Alan Booth | Go to book overview
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Chapter 4

Industrial development


Industry is frequently divided into primary, secondary and tertiary sectors. The primary sector is concerned with growing or extracting natural products and includes agriculture, forestry, fishing and (usually) mining. The secondary or manufacturing sector includes industries which process and change physical goods so that they acquire an added value. All other industries fall into the tertiary or service sector and are concerned with supplying some form of service. These distinctions are useful, although boundaries between sectors are not always clear and the classification of particular industries (such as mining) may be arbitrary. It is well established that, as economies develop and industrialise, the primary sector tends to become relatively less important in employment and output terms, even though its output may continue to increase absolutely. Since the Industrial Revolution British expansion has been centred on manufacturing. However, by the early twentieth century the proportion of the work-force in manufacturing reached its peak. In the interwar period manufacturing ceased to expand as an employer of labour (not in terms of output) and employment in the primary sector continued its sharp decline. Over half the work-force and the main growth area of employment was in the tertiary sector. These changes took place because of income and productivity effects. As incomes increased more of the increase was spent on services than on goods (for a fuller discussion, see Chapter 12). Also, while it proved possible to make substantial improvements in productivity in the primary and secondary sectors, in the tertiary sector productivity actually declined. In modern industrial economies the essential dynamic, but not the bulk of employment, is to be found in manufacturing industry, not least because it is usually assumed that the tertiary sector ‘services’ and derives demand from primary and secondary activities. The fortunes of the British economy during the interwar period were closely connected to developments in manufacturing.


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Modern Britain: An Economic and Social History


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