Industries contribute a significant chunk in the Gross Domestic Product(GDP) of a country. With time, industries became a crucial part of the economy of a country, contributing to development. There exist different types of industries which exist in a country. They have different roles to play in a country. Types of industries depend on the country they are in. Different countries have different types of industries.
This article will focus on the types of industries in the United States. Industries have contributed a lot in making the United States one of the largest economies in the world. If you are not aware of the industries that exist in the US and in general, then you have stumbled upon the perfect article. This will help you enhance your knowledge of the industrial world. Read on to know more.
What are Industries?
In layman’s language, industries are enterprises that produce and supply goods in an economy. They are responsible to maintain the supply chain of the economy. Industries contribute a significant bounty to the economy of a country and are used as a measure of development. A country having an efficient industrial sector is seen as more developed as compared to those having an inefficient industrial sector.
In economics, the industries are classified into four categories which are as follows:
- Primary Industry
Primary industry is concerned with the extraction of natural resources and processing them into products and commodities which can then be sold in the market. Primary industries deal with mining and extraction of minerals from the natural resources and breeding and reproduction of animals and plants.
Some of the examples of primary industries include agriculture, fishing, mining, quarrying, and many more.
- Secondary Industry
The secondary industry is the one that is concerned with taking the raw materials from the primary industry and then manufacturing them into goods and products. These industries take the raw materials and goods that are sold by the primary industries and process them further to produce more goods and products.
Some examples of secondary industries include food processing industries, heavy manufacturing industries, light manufacturing industries, and oil processing industries.
- Tertiary Industry
The tertiary industry is the one that is concerned with producing services instead of goods. It is also known as the service industry of an economy. They are responsible for producing services and facilitating the people of the country these services.
Some of the examples of tertiary industries include banking, tourism, finance, insurance, health, and many more.
- Quaternary Industry
The Quaternary industry is an extension of the tertiary industry which is concerned with producing services that are related to intellect and knowledge.
Some examples of quaternary industries include telecommunication, information technology, and many more.
These were the categories of industries that are prevalent in most of the economies around the world. The various types of industries that occur in a country can be taken under the ambit of these four major categories of industries,
Industries in the United States
The United States has a GDP of $22.73 trillion in 2021. And the major contributor to this economy is the industrial sector. Various industries contribute a significant chunk in the GDP of the United States. These various types of industries are elucidated upon subsequently.
The various industries in the United States are as follows:
- Information Technology Industry
Technology has become a need in the contemporary world. We cannot envisage a life without technology. The United States has witnessed a growth in the employment rates in the technological sector. This has increased the share of the information technology sector in the economy of the United States.
Information technology is concerned with transmitting, processing, storing, producing, and selling information. The job of the IT companies is to do all the above-mentioned work for the telephone companies, data processing companies, media companies, and many more.
According to a website called Statista, the technology industry contributed about $1.99 trillion to the GDP of the United States in the year 2020. A total of 10.5 % is contributed by the technology industry to the GDP of the United States.
- Retail industry
There is a well-established retail industry in the United States. The retail industry is considered the highest employer in the United States. About 10% of the total population is involved with the retail industry. The retail industry consists of chains of various retail stores that are responsible for selling the finished products to the people. The retail trade or industry contributes about 5.7% to the GDP of the United States, according to Statista.
The retail industry does not only contribute to the GDP by selling finished products but also by employing a significant portion of the population.
- Real Estate, Leasing, and Renting Industry
The real estate industry is perhaps the largest contributor to the GDP of the United States. It contributes to about 13% of the GDP of the country. According to worldatlas.com, this industry contributes about $1.898 trillion to the economy. The industry contributes to the economy through consumer spending and residential investment. Consumer spending includes contributing to the economy through payment and rent of household. The residential investment includes the construction of new houses, residential remodeling, and broker’s fees.
- Manufacturing Industry
The manufacturing industry is yet another important contributor to the GDP of the United States. The manufacturing industry contributes about 11% to the GDP of the country. These industries are responsible for processing the raw materials into finished products and then selling them to the wholesale or retail markets. This industry also contributes to increasing the employment rate in the country.
The healthcare industry in the United States contributes around 8% to the GDP of the United States. This is about $ 1.136 trillion of the national economy. The Healthcare sector has also given an impetus to the employment rate in the United States. It is suspected by the Bureau of Labor Statistics that the contribution of the healthcare sector in terms of providing employment will increase to about 18% by 2026.
Agribusiness is one of the largest contributors to the US economy. It is due to the large market size and infrastructure of the country. The share of agriculture in the economy is about 19.9% as of 2020-21. The US agribusiness is responsible for facilitating the economy as well as the workers. The US agribusiness industry allures huge investments as it is a fast-growing sector.
- Aerospace Industry
The Aerospace industry revolves around the research, manufacture, and development of flight vehicles. The Aerospace Industry of the United States is considered one of the bests in the world. The US has the largest aerospace industry in the world. This industry contributes around 5.2% to the GDP of the United States and creates over 4 million jobs.
- Automobile Industry
The Automobile Industry of the United States is one of the largest in the world. The automobile industry has contributed about $82.6 billion to the GDP of the United States. It accounts for about 3% of the economy. The automobile industry deals with the manufacturing, development, and marketing of automobiles. The automobile industry is also considered as a forefront of innovation and has room for further development. It is an industry that would be one of the leading ones in the next few years.
- Biopharmaceutical Industry
The Biopharmaceutical industry in the US has a market size of about $486.62 billion. This industry supports more than 4.7 million jobs. It deals with the production, development, and marketing of drugs that are essential for human use. The industry demands skilled and educated labor as it is concerned with research and development in chemicals. This is one of the growing industry and Covid 19 has been an impetus to this industry. With the Covid 19 pandemic devastating the lives of people, the demand for certain drugs has increased, thus leading to the increase in the markets size of the biopharmaceutical industry. The US economy has benefited from this.
- Energy Industry
The United States is also a leading producer of energy in the world. Its energy industries produce electricity from cleaner sources, natural gas, oil, coal, and renewable energy sources. This industry deals not only with the production of energy but also the distribution, transmission, and marketing of this energy. The oil and natural gas industry contributes about 8% to the GDP of the United States. It employs around 10.3 million people in the country. The energy industry is amongst the fastest-growing industries in the world. With the increase in the pace of tackling climate change, the industries which produce renewable and cleaner energy resources are gaining prominence. So, the US energy industry is expected to grow more in the coming future.
- Textile Industry
The textile industry is concerned with the production and marketing of textiles or clothes. It contributes around $70 billion to the GDP of the United States. The textiles industry will never lose its prominence because clothes are a desideratum, one cannot dwell without clothes. The textile industry also contributes to the economy by exporting its products, which brings in foreign currency, thus increasing the bounty of the country. Along with this, it also employs a significant chunk of the population.
- Logistics and Transportation Industry
The Logistics and Transportation Industry in the United States has been one of the most competitive industries in the world. This industry deals with the transportation of goods from one place to another. They are responsible for managing, executing, coordinating, and directing goods and products from the producers to the customers.
- Entertainment Industry
The entertainment industry of the United States is prominent in the world. People throughout the world follow Hollywood movies, songs, and shows. The American entertainment industry is the largest in the world. The entertainment industry in the United States contributes about $717 billion to the economy of the country. This serves as a source of entertainment as well as contributes a huge chunk to the GDP of the country.
- Finance and Insurance Industry
The financial and insurance industry is concerned with facilitating the people and the economy with financial and insurance services. It is one of the largest contributors to GDP in the United States. It accounts for about 8% of the GDP of the United Nations, contributing around $1.159 trillion to the economy.
- Travel and Tourism
The Travel and Tourism industry is dominant in the United States. It is concerned with the bounty earned by the travel and tourism activities that take place in the country. This industry contributes $1.1 trillion to the economy of the United States.
These were some of the prevalent industries in the United States.
Benefits of Industries to a country
The industry is an integral part of any country. The countries benefit from the industries’ contribution to the economy. Some of the benefits are as follows:
- Provides Economic Stability
Industries influence the economy of the country. A country that
is dependent on only one sector like agriculture cannot afford economic stability. Industries contribute a lot to the economic stability of a country.
- A helping hand to other sectors
Industries not only contribute to the economy directly but also indirectly. The industrial sector supports the agriculture and the service sector as well. Without industries, the natural resources or agricultural yield cannot be processed without the aid of industries. The service sector cannot operate without the industries. In simpler words, all the sectors are dependent on each other.
- Foreign Investment and Reserve
The industries are also responsible for bringing in investment from abroad. The countries which have a strong industrial base allure foreign industrialists to invest in their country. The industries produce and export goods and commodities. This is bought by the foreign countries which pay in their currency. This increases the foreign reserve of the country.
- Natural Resources being Utilized
Another benefit of the industries is the utilization of natural resources. The natural resources are utilized and processed by the industries. If industries did not exist, natural resources would not have been utilized in this way. The optimum utilization of natural resources is required to meet the needs and wants of the people. The industries are responsible for processing, manufacturing, and marketing the natural resources which facilitate the people of a country.
- Provides employment
The industries are also responsible for creating jobs. They also help in increasing the employment rate of the country. Many industries require labor in a large number. One of them is the manufacturing industry, which often requires labor. Facilitating the people of the country with jobs, the industries contribute to the economy of the country indirectly.
Industries are an integral part of any economy. Countries need industries to maintain their economic stability, process natural resources, and support the other sectors of society. However, one should be aware of the types of industries that exist in an economy and their purposes. Some of them being the aerospace industry, the healthcare industry, the travel, and tourism industry, the entertainment industry, the finance and insurance industry, and many more. The article elucidated upon some of the most important industries in the United States. However, countries around the world have these industries as well. A country is considered successful if it has a strong industrial sector. Industries are a desideratum for the evolution and development of a country.
The industries in a developed country are comparatively stronger than those in developing and underdeveloped countries. However, China is an exception, it has a very powerful manufacturing industry that determines the supply chain of many countries including developed countries like the United States in the global economy. The developing countries are often the hub of manufacturing industries because of the availability of a cheap labor force.
Frequently Asked Questions (FAQs)
Can you list some of the major industries?
Some of the industries are the automobile industry, the agribusiness industry, the information technology industry, the transportation industry, the telecommunication industry, and many more. These industries are prevalent in mostly the developed countries.
Which industry contributes the most to the GDP of the United States?
The industries that contribute the most to the GDP of the United States are the finance and insurance industry, the real estate, rental, and leasing industry, and the manufacturing industry. These industries are the largest contributors to the economy of the country.
Why are industries important?
Industries play a crucial role in the economy of any country. They are responsible for the economic stability of a country, they process the natural resources into finished products, they bring in the foreign investment and foreign reserve thus helping in managing the balance of payments and government revenue. They also create more job opportunities, thus increasing the employment rate of a country.
Are the other sectors of the economy dependent on industries?
All the sectors of the economy are dependent on each other. They need each other’s aid to fulfill the needs and wants of the people. Without industries, the agricultural and tertiary sectors would be of no use. Industries are needed to process agricultural produce and service sectors need industries for their operations.