The public sector is the set of institutions and administrative bodies of any country that manages the State directly or indirectly or that operates with a general budget.

In other words, it is that segment of the economy that is under the State’s control and, therefore, pursues the satisfaction of collective interests instead of mere profit. The latter constitutes its main difference concerning the private sector. In addition, all assets and capital of the public sector are State property, that is, collectively.

Characteristics of the public sector

The public sector is characterized by the following:

  • It is under the control and direction of the State: either directly or indirectly, and uses public resources and capital to operate.
  • Covers state agencies and institutions and public and semi-public companies in which the State is the majority shareholder.
  • It is not for profit: but pursues the welfare of the majority. However, this does not mean that it cannot be minimally profitable or that its organizations cannot be totally or partially self-financing.
  • Like the private sector: it is subject to the country’s laws and the Constitution; the text describes typically the administrative, legal and political regulations by which it must be guided.
  • Contrary to the private sector: its goods and resources are collective property; they belong to all the country’s citizens.
  • In the case of public companies: these may have their origin in processes of nationalization or nationalization of companies or private assets. The opposite procedure, the alienation of public support, is called privatization.

Components of the Public Sector

The Centralized Public Sector

It is also known as the fiscal sector, in which the agencies and institutions of the three fundamental public powers are found: the executive, legislative and judicial powers. These institutions are essential for social peace and the stability of the State:

The Executive Power

In charge of the political conduct of the State and diplomatic and international representation. It includes the administrative and government institutions, such as the presidency, the chancellery, the governorships, etc.

The Legislative Power

In charge of the elaboration of the laws and the control of the public power in representing the country’s political forces. It usually consists of a parliament, unicameral or bicameral (senators and representatives).

The Judicial Power

in charge of supervising the application of the laws and doing justice, reviewing and interpreting the constitutional legal text. It is about the courts, the courts and the Supreme Court of Justice.

Main Functions of the Public Sector

The main functions of the public sector have to do with the defence of a collective welfare state, that is, the protection of the fundamental interests of citizens and the historical legacy that every country represents. These functions consist of:

Promote Stability and the Rule of Law

It means that the public sector is in charge of creating a social, political and economic framework in which the population can prosper and live in peace, managing itself with a standard and objective body of laws.

Ensure Justice and Equal Opportunities

It means that the State must try to downplay the fundamental deficiencies of the least favoured. So that anyone, in theory, can obtain the just rewards of its efforts.

Intercede in the Economy if Necessary

It is a point on which there is usually little consensus should the State intervene in the economy to correct the imperfections and inequities of the market, or should it trust that the latter will take its course until reaching a balance?

Maintain an Effective Bureaucracy

Every State has its bureaucracy a way to standardize and regulate the procedures and operations. That it makes available to the people, and with the latter to provide support and also response to their fundamental needs: identity, representation, education, justice, etc.

Ensure the Redistribution of Wealth

Through taxes and subsidies, the public sector seeks to create the conditions for the disadvantaged to have a real opportunity for promotion, fostering a more equitable society with less concentration of wealth in the hands of a few.

How is the Public Sector Financed?

The public sector finances itself generally through the collection of taxes from citizens and more or less lucrative initiatives, such as public companies. However, profitability is not usually among the central values ​​of the public sector.

Another common form of public financing is the issuance of debt ( bonds ) by the State. Requesting loans from private investors, other nations, or multilateral organizations (public debt).


In general, the public sector has central importance in supporting any country’s political, legal, and economic order. However, the size and powers of the different organizations that comprise it are debate.