In
macroeconomics, an industry is a branch of an
economy
An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
that
produces a closely-related set of
raw materials,
goods
In economics, goods are items that satisfy human wants
and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not ...
, or
services. For example, one might refer to the
wood industry
The wood industry or timber industry (sometimes lumber industry -- when referring mainly to sawed boards) is the industry concerned with forestry, logging, timber trade, and the production of primary forest products and wood products (e.g. furnitu ...
or to the
insurance industry
Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...
.
When evaluating a single group or
company
A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared ...
, its dominant source of revenue is typically used by
industry classifications to classify it within a specific industry. For example the
International Standard Industrial Classification (ISIC) – used directly or through derived classifications for the
official statistics of most countries worldwide – classifies "statistical units" by the "economic activity in which they mainly engage". Industry is then defined as "set of statistical units that are classified into the same ISIC category".
However, a single
business need not belong just to one industry, such as when a large business (often referred to as a
conglomerate)
diversifies across separate industries.
Industries, though associated with specific
products, processes, and
consumer market
A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
s, can evolve over time. One distinct industry (for example,
barrelmaking) may become limited to a tiny
niche market and get mostly re-classified into another industry using new techniques. At the same time, entirely new industries may branch off from older ones once a significant market becomes apparent (as the
semiconductor industry became distinguished from the wider
electronics industry).
Industry classification is valuable for economic analysis because it leads to largely distinct categories with simple relationships. However, more complex cases, such as otherwise different processes yielding similar products, require an element of
standardization
Standardization or standardisation is the process of implementing and developing technical standards based on the consensus of different parties that include firms, users, interest groups, standards organizations and governments. Standardizatio ...
and prevent any one schema from fitting all possible uses.
Economic theories group industries further into larger categories dubbed
economic sector
One classical breakdown of economic activity distinguishes three sectors:
* Primary: involves the retrieval and production of raw-material commodities, such as corn, coal, wood or iron. Miners, farmers and fishermen are all workers in the p ...
s.
See also
*
Outline of industry
*
Industry classification
*
List of countries by GDP sector composition
This is a list of countries by gross domestic product (GDP) sector composition.
By economic sector
Nominal GDP sector composition
Nominal GDP sector composition, 2015 (in percentage and in millions of dollars):
Real GDP sector composition
G ...
References
External links
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