Public sector

economic-dictionary

The public sector is the set of organizations and institutions that are managed directly or indirectly by the State.

The public sector represents collective or public property, as opposed to the private sector (individual property of people or companies). It is represented by the State through institutions, organizations and companies with part or all of its capital of state origin.

Economic sector Public Law Public company

Components of the public sector

It is made up of two large elements: i) the centralized public sector (or fiscal sector) and ii) the decentralized public sector.

The fiscal sector includes all the institutions and bodies that represent the executive, legislative and judicial branches. We explain a little more about them below:

  • Executive branch: In charge of executing and enforcing the current regulations. Among its organizations we find all government institutions, secretariats, administrative offices, etc.
  • Legislative branch: In charge of creating the rules and laws. Among these institutions we find: the Senate and the Chamber of Deputies.
  • Judicial power: Administers justice and penalizes breaches of current regulations. Here we find the courts, courts, etc.

The decentralized public sector, for its part, includes all the services and state companies and other companies in which the State has some participation in their property.

Functions of the public sector

In countries where the idea of ​​a Welfare State is defended, the functions of the public sector should be directed towards the following objectives:

  • Promote economic efficiency: Trying to reduce or correct market failures. For example, through institutions that promote and defend competition, sectoral regulations, etc.
  • Improve income distribution: Seeks to help those most in need in society and promote a more equal income distribution. Among the actions contemplated are: subsidies, social aid, production of basic services and delivery to disadvantaged groups, etc.
  • Promote stability and economic growth: Wanting to reduce the negative effects of economic cycles, attract foreign investment, promote the development of certain economic sectors, etc.

In addition, public sector functions, of course, include others such as maintaining the security of the nation.

Public sector financing

The public sector is financed mainly from the collection of taxes and the issuance of debt. Other less important income is the profits of state-owned companies, donations, sale of public administration services (for example, collection of paperwork fees), etc.

With the phenomenon of globalization, the issue of acquiring debt is increasingly important. Although it is not essential, when the States cannot get enough money through taxes, what they do is borrow in the markets. These loans that they make to the states accumulate in the form of public debt. See public debt

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