Industry
Encyclopedia
Production (economics)
In economics, production is the act of creating 'use' value or 'utility' that can satisfy a want or need. The act may or may not include factors of production other than labor...
of an economic good or service within an economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
.
Industrial sectors
There are four key industrial economic sectorEconomic sector
An economy may include several sectors , that evolved in successive phases.* The ancient economy was mainly based on subsistence farming....
s: the primary sector, largely raw material extraction industries such as mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
and farming; the secondary sector, involving refining
Refinery
A refinery is a production facility composed of a group of chemical engineering unit processes and unit operations refining certain materials or converting raw material into products of value.-Types of refineries:Different types of refineries are as follows:...
, construction
Construction
In the fields of architecture and civil engineering, construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of human multitasking...
, and manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
; the tertiary sector, which deals with services (such as law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
and medicine
Medicine
Medicine is the science and art of healing. It encompasses a variety of health care practices evolved to maintain and restore health by the prevention and treatment of illness....
) and distribution of manufactured goods
Goods
Goods may refer to;*Good , physical product*Personal property, legal personal chattels...
; and the quaternary sector, a relatively new type of knowledge industry focusing on technological research, design and development such as computer programming, and biochemistry. A fifth, quinary, sector has been proposed encompassing nonprofit activities. The economy is also broadly separated into public sector
Public sector
The public sector, sometimes referred to as the state sector, is a part of the state that deals with either the production, delivery and allocation of goods and services by and for the government or its citizens, whether national, regional or local/municipal.Examples of public sector activity range...
and private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
, with industry generally categorized as private. Industries are also any business or manufacturing.
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 Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an and North America
North America
North America is a continent wholly within the Northern Hemisphere and almost wholly within the Western Hemisphere. It is also considered a northern subcontinent of the Americas...
n countries during the Industrial Revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...
, which upset previous mercantile and feudal economies through many successive rapid advances in technology, such as the steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...
and coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
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
Capitalism
Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...
economic policy. Railroads and steam-powered ships
Steamboat
A steamboat or steamship, sometimes called a steamer, is a ship in which the primary method of propulsion is steam power, typically driving propellers or paddlewheels...
began speedily establishing links with previously unreachable world markets, enabling private companies to develop to then-unheard of size and wealth
Wealth
Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...
. Following the Industrial Revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...
, perhaps a third of the world's economic output is derived from manufacturing industries—more than agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
's share.
Many developed countries
Developed country
A developed country is a country that has a high level of development according to some criteria. Which criteria, and which countries are classified as being developed, is a contentious issue...
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.
Industry classification systems used by the government commonly divide industry into three sectors: agriculture, manufacturing, and services. The primary sector of industry
Primary sector of industry
The sector of an economy making direct use of natural resources. This includes agriculture, forestry and fishing, mining, and extraction of oil and gas. This is contrasted with the secondary sector, producing manufactures and other processed goods, and the tertiary sector, producing services...
is agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
, mining
Mining
Mining is the extraction of valuable minerals or other geological materials from the earth, from an ore body, vein or seam. The term also includes the removal of soil. Materials recovered by mining include base metals, precious metals, iron, uranium, coal, diamonds, limestone, oil shale, rock...
and raw material extraction. The secondary sector of industry
Secondary sector of industry
The secondary sector of the economy or industrial sector includes those economic sectors that create a finished, tangible product: production and construction.-Function:...
is manufacturing
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
. The tertiary sector of industry
Tertiary sector of industry
The tertiary sector of the economy is one of the three economic sectors, the others being the secondary sector and the primary sector .The service sector consists of the "soft" parts of the economy, i.e...
is service production. Sometimes, one talks about a quaternary sector of industry
Quaternary sector of industry
The quaternary sector of the economy is a way to describe a knowledge-based part of the economy which typically includes services such as information generation and sharing, information technology, consultation, education, research and development, financial planning, and other knowledge-based...
, consisting of intellectual services such as research and development
Research and development
The phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
(R&D).
Market
Market
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers...
-based classification systems such as the Global Industry Classification Standard
Global Industry Classification Standard
The Global Industry Classification Standard is an industry taxonomy developed by MSCI and Standard & Poor's for use by the global financial community. The GICS structure consists of 10 sectors, 24 industry groups, 68 industries and 154 sub-industries into which S&P has categorized all major...
and the Industry Classification Benchmark
Industry Classification Benchmark
The Industry Classification Benchmark is an industry classification taxonomy developed by Dow Jones and FTSE. It is used to segregate markets into sectors within the macroeconomy...
are used in finance
Finance
"Finance" is often defined simply as the management of money or “funds” management Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created...
and market research
Market research
Market research is any organized effort to gather information about markets or customers. It is a very important component of business strategy...
. 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
Chemical industry
The chemical industry comprises the companies that produce industrial chemicals. Central to the modern world economy, it converts raw materials into more than 70,000 different products.-Products:...
, petroleum industry
Petroleum industry
The petroleum industry includes the global processes of exploration, extraction, refining, transporting , and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline...
, automotive industry
Automotive industry
The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
, electronic industry
Consumer electronics
Consumer electronics are electronic equipment intended for everyday use, most often in entertainment, communications and office productivity. Radio broadcasting in the early 20th century brought the first major consumer product, the broadcast receiver...
, meatpacking industry, hospitality industry
Hospitality industry
The hospitality industry consists of broad category of fields within the service industry that includes lodging, restaurants, event planning, theme parks, transportation, cruise line, and additional fields within the tourism industry. The hospitality industry is a several billion dollar industry...
, food industry
Food industry
The food production is a complex, global collective of diverse businesses that together supply much of the food energy consumed by the world population...
, fish industry, software industry
Software industry
The software industry includes businesses involved in the development, maintenance and publication of computer software using any business model...
, paper industry, entertainment industry, semiconductor industry
Semiconductor industry
The semiconductor industry is the aggregate collection of companies engaged in the design and fabrication of semiconductor devices. It formed around 1960, once the fabrication of semiconductors became a viable business...
, cultural industry
Cultural industry
According to international organizations such as UNESCO and the General Agreement on Tariffs and Trade , cultural industries combine the creation, production, and distribution of goods and services that are cultural in nature and usually protected by intellectual property rights.-The concept:The...
, poverty industry
Poverty industry
The term poverty industry refers to a wide-range of money-making activities that attract a large portion of their business from the poor. Businesses in the poverty industry often include payday loan centers, pawnshops, casinos, liquor stores, tobacco stores, and credit card companies. Illegal...
- labor-intensive industry - capital-intensive industry
- light industryLight industryLight industry is usually less capital intensive than heavy industry, and is more consumer-oriented than business-oriented...
- heavy industryHeavy industryHeavy industry does not have a single fixed meaning as compared to light industry. It can mean production of products which are either heavy in weight or in the processes leading to their production. In general, it is a popular term used within the name of many Japanese and Korean firms, meaning...
Industrial development
The industrial revolutionIndustrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...
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
Assembly line
An assembly line is a manufacturing process in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods...
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
Automation
Automation is the use of control systems and information technologies to reduce the need for human work in the production of goods and services. In the scope of industrialization, automation is a step beyond mechanization...
was increasingly used to replace human operators. This process has accelerated with the development of the computer
Computer
A computer is a programmable machine designed to sequentially and automatically carry out a sequence of arithmetic or logical operations. The particular sequence of operations can be changed readily, allowing the computer to solve more than one kind of problem...
and the robot
Robot
A robot is a mechanical or virtual intelligent agent that can perform tasks automatically or with guidance, typically by remote control. In practice a robot is usually an electro-mechanical machine that is guided by computer and electronic programming. Robots can be autonomous, semi-autonomous or...
.
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 carriageCarriage
A carriage is a wheeled vehicle for people, usually horse-drawn; litters and sedan chairs are excluded, since they are wheelless vehicles. The carriage is especially designed for private passenger use and for comfort or elegance, though some are also used to transport goods. It may be light,...
manufacturing when the automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...
was mass-produced.
A recent trend has been the migration of prosperous, industrialized nations toward a post-industrial society
Post-industrial society
If a nation becomes "post-industrial" it passes through, or dodges, a phase of society predominated by a manufacturing-based economy and moves on to a structure of society based on the provision of information, innovation, finance, and services.-Characteristics:...
. 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
Informational revolution
The term information revolution describes current economic, social and technological trends beyond the Industrial 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. The truth however is that it has been caused by the introduction of the lean manufacturing
Lean manufacturing
Lean manufacturing, lean enterprise, or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination...
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.
Related to this change is the upgrading of the quality of the produce 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 societyIndustrial society
In sociology, industrial society refers to a society driven by the use of technology to enable mass production, supporting a large population with a high capacity for division of labour. Such a structure developed in the west in the period of time following the Industrial Revolution, and replaced...
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
Industrial policy
The Industrial Policy plan of a nation, sometimes shortened IP, "denotes a nation's declared, official, total strategic effort to influence sectoral development and, thus, national industry portfolio." These interventionist measures comprise "policies that stimulate specific activities and promote...
, regulating industrial placement, industrial pollution
Pollution
Pollution is the introduction of contaminants into a natural environment that causes instability, disorder, harm or discomfort to the ecosystem i.e. physical systems or living organisms. Pollution can take the form of chemical substances or energy, such as noise, heat or light...
, 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 fileRank and file
In politics and labor unions the rank and file are the individual members of an organization, exclusive of its leadership. The phrase originated in the military, denoting the horizontal "ranks" and vertical "files" of individual foot-soldiers, exclusive of the noncommissioned officers....
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, mobilizationMobilization
Mobilization is the act of assembling and making both troops and supplies ready for war. The word mobilization was first used, in a military context, in order to describe the preparation of the Prussian army during the 1850s and 1860s. Mobilization theories and techniques have continuously changed...
, the total war
Total war
Total war is a war in which a belligerent engages in the complete mobilization of fully available resources and population.In the mid-19th century, "total war" was identified by scholars as a separate class of warfare...
concept and weapons of mass destruction
Weapons of mass destruction
A weapon of mass destruction is a weapon that can kill and bring significant harm to a large number of humans and/or cause great damage to man-made structures , natural structures , or the biosphere in general...
. Early instances of industrial warfare
Industrial warfare
Industrial warfare is a period in the history of warfare ranging roughly from the early nineteenth century and the start of the Industrial Revolution to the beginning of the Atomic Age, which saw the rise of nation-states, capable of creating and equipping large armies and navies through the...
were the Crimean War
Crimean War
The Crimean War was a conflict fought between the Russian Empire and an alliance of the French Empire, the British Empire, the Ottoman Empire, and the Kingdom of Sardinia. The war was part of a long-running contest between the major European powers for influence over territories of the declining...
and the American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
, but its full potential showed during the world wars. See also military-industrial complex
Military-industrial complex
Military–industrial complex , or Military–industrial-congressional complex is a concept commonly used to refer to policy and monetary relationships between legislators, national armed forces, and the industrial sector that supports them...
, arms industry
Arms industry
The arms industry is a global industry and business which manufactures and sells weapons and military technology and equipment. It comprises government and commercial industry involved in research, development, production, and service of military material, equipment and facilities...
, military industry and modern warfare
Modern warfare
Modern warfare, although present in every historical period of military history, is generally used to refer to the concepts, methods and technologies that have come into use during and after the Second World War and the Korean War...
.
ISIC
ISIC (Rev.4) stands for International Standard Industrial ClassificationInternational Standard Industrial Classification
The International Standard Industrial Classification of All Economic Activities is a United Nations system for classifying economic data. The United Nations Statistics Division describes it in the following terms:...
of all economic activities, the most complete and systematic industrial classification made by United Nations Statistics Division.
ISIC Rev.4 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$ | % of Global Industry |
|---|---|---|---|
| — | World Gross world product Gross world product is the total gross national product of all the countries in the world. This also equals the total gross domestic product. See measures of national income and output for more details... |
21,633.609 | 100.0% |
| — |  European Union |
4,490.052 | 20.8% |
| 1 |  United States |
3,329.324 | 15.4% |
| 2 |  Mainland China |
3,277.592 | 15.2% |
| 3 |  Japan |
1,457.990 | 6.7% |
| 4 |  Germany |
1,008.757 | 4.7% |
| 5 |  Russia |
693.644 | 3.2% |
| 6 |  Brazil |
674.804 | 3.1% |
| 7 |  Italy |
568.164 | 2.6% |
| 8 |  United Kingdom |
540.853 | 2.5% |
| 9 |  Early Modern France |
519.529 | 2.4% |
| 10 |  India |
484.809 | 2.2% |
| 11 |  Canada |
462.533 | 2.1% |
| 12 |  South Korea |
457.392 | 2.1% |
| 13 |  Spain |
399.485 | 1.8% |
| 14 |  Indonesia |
392.137 | 1.8% |
| 15 |  Mexico |
386.380 | 1.8% |
| 16 |  Australia |
385.895 | 1.8% |
| 17 |  Saudi Arabia |
346.262 | 1.6% |
| 18 |  Netherlands |
213.712 | 1.0% |
| 19 |  Turkey |
202.984 | 0.9% |
| 20 |  Iran |
198.097 | 0.9% |
| - | Remaining Countries | 5.633.264 | 26.0% |
| Rank | Country | Output in billions of US$ | % of Global Industry |
|---|---|---|---|
| — | World Gross world product Gross world product is the total gross national product of all the countries in the world. This also equals the total gross domestic product. See measures of national income and output for more details... |
24,365.535 | 100.0% |
| 1 | Mainland China |
5,307.309 | 21.8% |
| — | European Union |
3,947.146 | 16.2% |
| 2 | United States |
3,329.324 | 13.7% |
| 3 | India |
1,175.548 | 4.8% |
| 4 | Japan |
1,094.504 | 4.5% |
| 5 | Russia |
874.541 | 3.6% |
| 6 | Germany |
858.873 | 3.5% |
| 7 | Brazil |
618.849 | 2.5% |
| 8 | South Korea |
611.548 | 2.5% |
| 9 | Mexico |
540.839 | 2.2% |
| 10 | Indonesia |
527.640 | 2.2% |
| 11 | United Kingdom |
491.282 | 2.0% |
| 12 | Italy |
462.636 | 1.9% |
| 13 | Saudi Arabia |
418.796 | 1.7% |
| 14 | Early Modern France |
410.102 | 1.7% |
| 15 | Iran |
387.908 | 1.6% |
| 16 | Spain |
367.387 | 1.5% |
| 17 | Canada |
365.863 | 1.5% |
| 18 | Turkey |
280.513 | 1.2% |
| 19 |  Thailand |
278.443 | 1.1% |
| 20 |  Republic of China |
275.698 | 1.1% |
| - | Remaining Countries | 5,687.931 | 23.3% |
See also
- North American Industry Classification System
- North American Product Classification System
- Standard Industrial ClassificationStandard Industrial ClassificationThe Standard Industrial Classification is a United States government system for classifying industries by a four-digit code. Established in 1937, it is being supplanted by the six-digit North American Industry Classification System , which was released in 1997; however certain government...
- Industry informationIndustry informationIndustry classification or industry taxonomy organizes companies into industrial groupings based on similar production processes, similar products, or similar behavior in financial markets....