• What is the public sector?
• Characteristics of the public sector
• Public sector components
• Main functions of the public sector
• How is the public sector financed?

We explain what the public sector is, its characteristics, components and main functions. Also, how is it financed?

All assets and capital of the public sector are State property.

What is the public sector?

The public sector is the set of institutions and administrative bodies of any country who handles the Condition directly or indirectly, or that operate with budget public.

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

In general, the public sector has a central importance for the support of the political, legal and economic order of any country, although the size and powers of the different organizations that comprise it are a matter of debate.

Some people believe that the state should be strong and have interference in economic and social affairs. On the contrary, others think that, on the contrary, the State should play a minimal role in the society, dealing only with what is essential. In whatever way, efficiency of the public sector will largely depend on the wellness of the population.

This sector is also a source of employment and usually its workers, called public workers, access positions through various test or bidding systems.

This prevents (in theory) that the resources of the State, belonging to the totality of the citizenry, are destined to the corruption and the nepotism, or that the leaders of the day (the government) assign permanent positions within the State as they please.

Characteristics of the public sector

Broadly speaking, 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.
• It encompasses state agencies and institutions, as well as public enterprises and semi-public in which the State is the majority shareholder.
• Does not have profit, but pursues the welfare of the majority. 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 laws of the country and the Constitution, the text of which normally describes the rules administrative, legal and political by which it must be guided.
• Contrary to the private sector, its goods and resources are collectively owned, that is, they belong to the totality of citizens from the country.
• In the case of public companies, these may have their origin in processes of nationalization or nationalization of Business or private property. The opposite procedure, that is, the alienation of public assets, is called privatization.

Public sector components

The public sector can be classified into two main types of components:

The centralized public sector, also known as the fiscal sector, in which the agencies and institutions of the three public powers fundamental: the executive, the legislative and the judiciary. These institutions are fundamental for social peace and the stability of the State:

• The executive power, in charge of the political leadership of the State and diplomatic and international representation. This 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 representation of the political forces of the country. It usually consists of a parliament, which can be unicameral or bicameral (senators and representatives).
• The power of attorney, responsible for supervising the application of laws and making Justice, revising and interpreting the constitutional legal text. In this case it is about the courts, the courts and the Supreme Court of Justice.

The decentralized public sector, in which there are public or state companies and basic service organizations in which the State is the sole or majority shareholder.

Main functions of the public sector

The public sector can alleviate the basic deficiencies of the least advantaged.

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

• Promote stability and the rule of law. This 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 common and objective body of laws.
• ensure justice and equal opportunities. Which means that the State must try to alleviate the basic deficiencies of the least favored so that anyone, in theory, can obtain the just rewards for their efforts.
• Intercede in the economy if necessary. This 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 own course until reaching a balance?
• hold a bureaucracy effective.Every State has its own 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 respond to their fundamental needs: identity, representation, education, justice, etc
• Ensure the redistribution of wealth. Through the 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, as well as more or less lucrative initiatives, such as public companies. However, profitability is not usually among the main values ​​of the public sector.

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