Economy »Private Sector

Definition of Private Sector

The private sector is the set of economic activity that is not controlled by the state. While in the public sector the role is in the hands of the state, in the private sector the company is the fundamental element.

When we say that the private company is the engine of this sector, we must bear in mind that it does not matter what the volume of it is or the legal form it has. A company can be formed by an individual autonomously or by thousands of workers and legally has different organizational options ( limited partnership, public limited company , collective society, a temporary union of companies or joint venture ...). In any case, the main objective of the private sector is the economic benefit through the products or services that it tries to commercialize within a market in which it competes with other companies.

In order to make money

The economic benefit is the fundamental aspect of the private sector, but not the only one. Keep in mind that different companies create jobs in different economic sectors and employment has an obvious social dimension and not exclusively economic.

Another relevant issue in the private sector is its social responsibility . In recent years some companies have incorporated criteria that are not exclusively economic to guide their activity. You could say that ethics and certain values ​​can be part of the entrepreneurial spirit. This reality receives a denomination, Corporate Social Responsibility (CSR). The fundamental characteristic of these companies is that their social dimension (for example, their commitment to the environment ) is voluntary.

Debate private sector or public sector

There is a classic debate in the economy regarding the importance of the two sectors. From some political positions the role of the private sphere or that of the public sphere is defended. For some, the public sector must be maintained and strengthened, since it is a guarantee of equality , of social justice and allows social imbalances not to be so deep. For others, the public sector is ineffective, very expensive and interventionist, so they understand that the private sector must be committed as a true engine of the economy and limit the public to its minimum expression.

From an ideological perspective, the supporters of the private sector would be the liberal or neo- liberal political formations and the defenders of the public would be the social-democratic ideologies.

In practice, the two sectors are related in the economic field, since some public services are managed from private entities through concessions or subcontracting of services.

Author: Javier Navarro | Site: - definition | Date: April 2015 | URL: /economia/sector-privado.php

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