Running Head: NAICS AND WORLD TRADE 1
NAICS AND WORLD TRADE
NAICS and World Trade
Sanford Brown Online
The North American Industry Classification System (NAICS) is a standardization system that is used by businesses and government agencies in order to classify companies into 20 industries based on their primary economic activity. The US government, in agreement with Canada and Mexico developed NAICS as a system to collect, analyze, and publish data regarding economic activities. NAICS took the place of the previous Standard Industrial Classification (SIC) system in 1997 and is updated every five years in order to stay current with evolving business and industry classifications. The most recent version of NAICS was launched in January of 2012.
The Standard Industrial Classification (SIC) system had served as the basis for the collection and analysis of the U.S. economic statistics for 60 years. An industry is considered a group of businesses primarily involved in producing or managing the same product, group of products or services.
The SIC system was created in the 1930s during a time in which the U.S. economy was dominated by manufacturing. There were numerous revisions to this system over the years as the industrial composition of the economy changed but despite the continual revisions, the SIC system was subject to increasing criticism regarding its failing ability to handle fast paced changes within the U.S. economy. Specifically, developments in information services, advances in health care provisions, the expansion of the service industry, and high-tech manufacturing are some of the industrial changes that were not supported under the SIC system.
NAICS was developed based on the SIC economic concept in which businesses are gathered into industries on the basis of their production processes or the goods and services produced. Creating a classification system that is based on constant...