Secondary sector of the economy

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In macroeconomics, the secondary sector of the economy is an economic sector in the three-sector theory that describes the role of manufacturing. It encompasses industries that produce a finished, usable product or are involved in construction.

This sector generally takes the output of the primary sector (i.e. raw materials) and creates finished goods suitable for sale to domestic businesses or consumers and for export (via distribution through the tertiary sector). Many of these industries consume large quantities of energy, require factories and use machinery; they are often classified as light or heavy based on such quantities. This also produces waste materials and waste heat that may cause environmental problems or pollution (see negative externalities). Examples include textile production, car manufacturing, and handicraft. [1]

Manufacturing is an important activity in promoting economic growth and development. Nations that export manufactured products tend to generate higher marginal GDP growth, which supports higher incomes and therefore marginal tax revenue needed to fund such government expenditures as health care and infrastructure. Among developed countries, it is an important source of well-paying jobs for the middle class (e.g., engineering) to facilitate greater social mobility for successive generations on the economy. Currently, an estimated 20% of the labor force in the United States is involved in the secondary industry. [2]

The secondary sector depends on the primary sector for the raw materials necessary for production. Countries that primarily produce agricultural and other raw materials (i.e., primary sector) tend to grow slowly and remain either under-developed or developing economies. The value added through the transformation of raw materials into finished goods reliably generates greater profitability, which underlies the faster growth of developed economies.

20 largest Countries by Industrial Output (in PPP terms) according to the IMF and CIA World Factbook, at peak level as of 2020 [ citation needed ]
Countries by Industrial Output (in PPP terms) at peak level as of 2020 (billions in USD)
(01) Flag of the People's Republic of China.svg  China
(—) Flag of Europe.svg  European Union
(02) Flag of the United States.svg  United States
(03) Flag of India.svg  India
(04) Flag of Japan.svg  Japan
(05) Flag of Indonesia.svg  Indonesia
(06) Flag of Russia.svg  Russia
(07) Flag of Germany.svg  Germany
(08) Flag of South Korea.svg  South Korea
(09) Flag of Saudi Arabia.svg  Saudi Arabia
(10) Flag of Mexico.svg  Mexico
(11) Flag of Turkey.svg  Turkey
(12) Flag of Brazil.svg  Brazil
(13) Flag of the United Kingdom.svg  United Kingdom
(14) Flag of France.svg  France
(15) Flag of Italy.svg  Italy
(16) Flag of Iran.svg  Iran
(17) Flag of Canada (Pantone).svg  Canada
(18) Flag of Poland.svg  Poland
(19) Flag of Thailand.svg  Thailand
(20) Flag of Egypt.svg  Egypt

The twenty largest countries by industrial output (in PPP terms) at peak level as of 2020, according to the IMF and CIA World Factbook.[ citation needed ]

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  1. "Archived copy". Archived from the original on 2020-08-05. Retrieved 2020-07-14.CS1 maint: archived copy as title (link)
  2. "Secondary Industry: Meaning, Types, Characteristics, and Examples".