Economic geography is a branch of human geography which takes account of the economic activities and its determinants. It has four components or branches: primary sector, secondary sector, tertiary sector, and quaternary sector.
As far as the quaternary sector is concerned, it comprises all those activities that are knowledge based such as technical skills, administrative skills, research and development, division of labour, and specialization or practicing specialized knowledge.
The quaternary sector has a special place in contemporary times. It takes account of specialized activities in the knowledge sector or knowledge based economy. We know every economy has three fundamental sectors: primary, secondary, and tertiary sector.
There is complementarity of tasks among these sectors (both input and output complementarity). Better the interface and tuning among these sectors, better the growth and development prospects and vice versa.
It is important to remember that with every passing day, another important sector is developing viz. 'Knowledge sector'. Quaternary sector is an essential constituent of knowledge sector and therefore a sine-qua-non for economic development.
Quaternary sector is an essential part of Economic Geography in general and New Economic Geography in particular. It helps in the development of Economic Spatial Structure which promotes spatial economic development.
It is very important to analyse the characteristics of quaternary sector in order to analyse the characteristics of Economic Geography and New Economic Geography.
This will have a dual effect: on one hand, it will clearly analyse the process of formation and evolution of Economic Spatial Structure. On another hand, it will promote economic development (particularly Spatial Economic Development).
Knowledge has always been recognised as a significant driver of economic growth and economic development. Almost all growth models particularly endogenous growth models argue that improvements in the level of knowledge and human capital promote economic growth and economic development.
Quaternary sector is an important source of improving knowledge level and human capital level. There is a bi-way causality between quaternary sector and economic development.
On one hand, quaternary sector promotes economic development and on the other hand, economic development promotes quaternary services in the economy.
The improvements in the quaternary sector has capacity to bring improvement in other sectors of the economy and therefore encourages the path towards economic development.
The more we invest in the quaternary sector, the more infrastructural development takes place and accordingly, more economic welfare is attained and vice versa.
Furthermore, the more an economy attains economic development goals, the more it invests in knowledge, skills, technological advancements, and research and development. Hence, economic development has a great bearing upon quaternary sector or quaternary services.
Quaternary sector will do wonders if it follows 'Positive Assortative Matching'. This means that workers with high skills will work together and workers with low skills will work together.
This type of matching means that high-value products will be concentrated in countries with high-value skills. It is in the best interest of everyone to work with more efficient or productive workers because if your efforts are multiplied by those of someone else, you will be more productive when working with a more productive person.
A firm with a higher productivity worker can more afford to pay a higher wage and has the incentive to bid higher to do so because the value of output will be greater with two productive workers than with one low and one high productivity workers.
As a result, there is a very high probability or a strong tendency for the most productive workers to work together. Therefore, we can say that quaternary sector will promote economic development that is sustainable in the long run if it follows Positive Assortative Matching.
Dr. Binish Qadri, Assistant Professor Economics, Cluster University Srinagar.
DISCLAIMER: The views and opinions expressed in this article are the personal opinions of the author.
The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.