Definition of Public Sector

The public sector is the sphere of economy in which the state has the main role and is opposed to the private sector, in which entrepreneurship is the engine of economic activity.

3 fundamental instances

The state as a promoter of the public sector has three different levels or areas: 1- Business, 2- As an organization politics and 3- As a benefactor entity.

The role of the state

The state has a role in the economy of a country, since it has the legislative capacity to intervene in all sectors, especially those that are strategic. Through the enactment of laws and normative regulations, the state manages certain activities with a public outreach (e.g. in transport, mining, infrastructure, energy supply, etc).

From a political organization perspective, the state has powers related to national security, justice or defense, which are basic pillars of the public sector.

The state assumes a key role as a social benefactor (also known as the welfare state in some countries). Laws and organizational systems that affect the

education, health or social Security they are part of the public sector.

The idea of ​​the public sector has, therefore, a political and social dimension that radically differentiates it from the private sector, whose approach is basically of an economic nature.

National budget

Every state needs funding to meet its responsibilities. There are three different sources of financing: taxes on citizens and the private sector (which can be direct or indirect), public credit or the issuance of currency.

With the money raised, the state plans a national budget, which specifies what will be spend and what will be the amount of money corresponding to each expense, that is, the different items budgetary.

Maintain a balanced balance

The relationship between income and expenses in a national budget presents three possibilities: 1- If the income is lower than the expenses, it would be a deficit budget, 2- If income exceeds expenses, we would speak of budget surplus and 3- If income and expenses coincide, there would be a situation of Balance budgetary.

The national budget has a social projection, since it can be consulted by citizens. In this way, the citizenship knows the destination of the money managed by the administration to serve the public sector and society as a whole.

Public Sector Issues