Industry is the production of an economic good or service within an economy.
Industrial sectors
Industry is often classified into three sectors: primary or extractive, secondary or manufacturing, and tertiary or services. Some authors add quaternary (knowledge) or even quinary (culture and research) sectors.
Industries can be classified on the basis of raw materials, size and ownership.
- Raw Materials: Industries may be agriculture based, Marine based, Mineral based, Forest based.
- Size: It refers to the amount of capital invested, number of people employed and the volume of production.
- Ownership: Industries can be classified into private sector, state owned or public sector, joint sector and co-operative sector
Industry in the sense of manufacturing became a key sector of production and labour in European and North American countries during the Industrial Revolution, which upset previous mercantile and feudal economies through many successive rapid advances in technology, such as the steel and coal production. It is aided by technological advances, and has continued to develop into new types and sectors to this day. Industrial countries then assumed a capitalist economic policy. Railroads and steam-powered ships began speedily establishing links with previously unreachable world markets, enabling private companies to develop to then-unheard of size and wealth. Following the Industrial Revolution, perhaps a third of the world's economic output is derived from manufacturing industries—more than agriculture's share.
Many developed countries and many developing/semi-developed countries (People's Republic of China, India etc.) depend significantly on industry. Industries, the countries they reside in, and the economies of those countries are interlinked in a complex web of interdependence.
Industry is divided into four sectors. They are:
| Sector | Definition |
|---|---|
| Primary | This involves the extraction of resources directly from the Earth, this includes farming, mining and logging. They do not process the products at all. They send it off to factories to make a profit. |
| Secondary | This group is involved in the processing products from primary industries. This includes all factories—those that refine metals, produce furniture, or pack farm products such as meat. |
| Tertiary | This group is involved in the provision of services. They include teachers, managers and other service providers. |
| Quaternary | This group is involved in the research of science and technology. They include scientists. |
As a country develops people move away from the primary sector to secondary and then to tertiary.
There are many other different kinds of industries, and often organized into different classes or sectors by a variety of industrial classifications.
The reason American cars don’t sell anymore is that they have forgotten how to design the American Dream. What does it matter if you buy a car today or six months from now, because cars are not beautiful. That’s why the American auto industry is in trouble: no design, no desire.
— Karl Lagerfeld (b. 1938)
Industry classification systems used by the government commonly divide industry into three sectors: agriculture, manufacturing, and services. The primary sector of industry is agriculture, mining and raw material extraction. The secondary sector of industry is manufacturing. The tertiary sector of industry is service production. Sometimes, one talks about a quaternary sector of industry, consisting of intellectual services such as research and development (R& D).
Market-based classification systems such as the Global Industry Classification Standard and the Industry Classification Benchmark are used in finance and market research. These classification systems commonly divide industries according to similar functions and markets and identify businesses producing related products.
Industries can also be identified by product: chemical industry, petroleum industry, automotive industry, electronic industry, meatpacking industry, hospitality industry, food industry, fish industry, software industry, paper industry, entertainment industry, semiconductor industry, cultural industry, poverty industry
- labor-intensive industry - capital-intensive industry
- light industry - heavy industry
Industrial development
The industrial revolution led to the development of factories for large-scale production, with consequent changes in society. Originally the factories were steam-powered, but later transitioned to electricity once an electrical grid was developed. The mechanized assembly line was introduced to assemble parts in a repeatable fashion, with individual workers performing specific steps during the process. This led to significant increases in efficiency, lowering the cost of the end process. Later automation was increasingly used to replace human operators. This process has accelerated with the development of the computer and the robot.
Declining industries
Historically certain manufacturing industries have gone into a decline due to various economic factors, including the development of replacement technology or the loss of competitive advantage. An example of the former is the decline in carriage manufacturing when the automobile was mass-produced.
A recent trend has been the migration of prosperous, industrialized nations toward a post-industrial society. This is manifested by an increase in the service sector at the expense of manufacturing, and the development of an information-based economy, the so-called informational revolution. In a post-industrial society, manufacturing is relocated to economically more favourable locations through a process of off-shoring.
The major difficulty for people looking to measure manufacturing industries outputs and economic effect is finding a measurement which is stable historically. Traditionally, success has been measured in the number of jobs created. The lowering of employee numbers in the manufacturing sector has been assumed to be caused by a decline in the competitiveness of the sector although much has been caused by the introduction of the lean manufacturing process. Eventually, this will lead to competing product lines being managed by one of two people, as is already the case in the cigarette manufacturing industry.
More than ten million women march to work every morning side by side with the men. Steadily the importance of women is gaining not only in the routine tasks of industry but in executive responsibility. I include also the woman who stays at home as the guardian of the welfare of the family. She is a partner in the job and wages. Women constitute a part of our industrial achievement.
— Herbert Hoover (1874–1964)
Related to this change is the upgrading of the quality of the product being manufactured. While it is easy to produce a low tech, low skill product, the ability to manufacture high quality products is limited to companies with a high skilled staff.
Society
An industrial society can be defined in many ways. Today, industry is an important part of most societies and nations. A government must have some kind of industrial policy, regulating industrial placement, industrial pollution, financing and industrial labor.
Industrial labour
In an industrial society, industry employs a major part of the population. This occurs typically in the manufacturing sector. A labor union is an organization of workers who have banded together to achieve common goals in key areas such as wages, hours, and working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members (rank and file members) and negotiates labor contracts with employers. This movement first rose among industrial workers.
War
The industrial revolution changed warfare, with mass-produced weaponry and supplies, machine-powered transportation, mobilization, the total war concept and weapons of mass destruction. Early instances of industrial warfare were the Crimean War and the American Civil War, but its full potential showed during the world wars. See also military-industrial complex, arms industry, military industry and modern warfare.
ISIC
ISIC (Rev.4) stands for International Standard Industrial Classification of all economic activities, the most complete and systematic industrial classification made by United Nations Statistics Division.
ISIC is a standard classification of economic activities arranged so that entities can be classified according to the activity they carry out. The categories of ISIC at the most detailed level (classes) are delineated according to what is, in most countries, the customary combination of activities described in statistical units, and considers the relative importance of the activities included in these classes.
While ISIC Rev.4 continues to use criteria such as input, output and use of the products produced, more emphasis has been given to the character of the production process in defining and delineating ISIC classes.
List of countries by industrial output
| Rank | Country | Output in billions of US$ | Composition of GDP (%) | % of Global Industry |
|---|---|---|---|---|
| — | World | 21,913.656 | 31.3% | 100.0% |
| — | European Union | 4,508.012 | 25.1% | 20.6% |
| 1 | United States | 3,329.324 | 22.1% | 15.2% |
| 2 | China | 3,291.569 | 47.1% | 15.0% |
| 3 | Japan | 1,405.292 | 24.0% | 6.4% |
| 4 | Germany | 1,019.643 | 28.1% | 4.7% |
| 5 | Russia | 697.414 | 37.0% | 3.2% |
| 6 | Brazil | 677.322 | 26.9% | 3.1% |
| 7 | Italy | 565.918 | 25.2% | 2.6% |
| 8 | United Kingdom | 535.891 | 21.6% | 2.4% |
| 9 | France | 519.529 | 18.5% | 2.4% |
| 10 | India | 484.809 | 26.3% | 2.2% |
| 11 | Canada | 476.602 | 27.1% | 2.2% |
| 12 | South Korea | 458.556 | 39.4% | 2.1% |
| 13 | Spain | 396.412 | 25.8% | 1.8% |
| 14 | Mexico | 388.751 | 32.8% | 1.8% |
| 15 | Australia | 385.895 | 25.6% | 1.8% |
| 16 | Indonesia | 383.794 | 46.0% | 1.8% |
| 17 | Saudi Arabia | 378.759 | 67.6% | 1.7% |
| 18 | United Arab Emirates | 212.700 | 59.4% | 1.0% |
| 19 | Netherlands | 207.704 | 24.2% | 0.9% |
| 20 | Turkey | 205.273 | 26.9% | 0.9% |
| - | Remaining Countries | 5,872.860 | 26.8% |
| Rank | Country | Output in billions of US$ | Composition of GDP (%) | % of Global Industry |
|---|---|---|---|---|
| — | World | 24,680.946 | 31.3% | 100.0% |
| 1 | China | 5,329.942 | 47.1% | 21.6% |
| — | European Union | 3,962.935 | 25.1% | 16.1% |
| 2 | United States | 3,329.324 | 22.1% | 13.5% |
| 3 | India | 1,175.548 | 26.3% | 4.8% |
| 4 | Japan | 1,054.944 | 24.0% | 4.3% |
| 5 | Russia | 879.294 | 37.0% | 3.6% |
| 6 | Germany | 868.141 | 28.1% | 3.5% |
| 7 | Brazil | 621.158 | 26.9% | 2.5% |
| 8 | South Korea | 613.104 | 39.4% | 2.5% |
| 9 | Mexico | 544.157 | 32.8% | 2.2% |
| 10 | Indonesia | 516.413 | 46.0% | 2.1% |
| 11 | United Kingdom | 486.774 | 21.6% | 2.0% |
| 12 | Italy | 460.807 | 25.2% | 1.9% |
| 13 | Saudi Arabia | 458.100 | 67.6% | 1.9% |
| 14 | France | 410.102 | 18.5% | 1.7% |
| 15 | Iran | 377.676 | 40.6% | 1.5% |
| 16 | Canada | 376.992 | 27.1% | 1.5% |
| 17 | Spain | 364.561 | 25.8% | 1.5% |
| 18 | Turkey | 283.677 | 26.9% | 1.1% |
| 19 | Taiwan | 283.676 | 32.0% | 1.1% |
| 20 | Thailand | 282.180 | 45.3% | 1.1% |
| - | Remaining Countries | 5,948.108 | 24.1% |