The North American Industry Classification System, or NAICS, is a standardized system used to classify businesses and industries in the United States, Canada, and Mexico. It was developed to provide a consistent framework for collecting, analyzing, and comparing economic data across these countries. NAICS codes are numerical and help identify the primary activities of businesses, making it easier for government agencies, researchers, and companies to understand industry trends. NAICS replaced the older Standard Industrial Classification (SIC) system in 1997. The system is organized hierarchically, with codes ranging from two to six digits, where each digit adds more detail about the industry. This classification system is essential for economic analysis, policy-making, and business planning.