What is the Public Sector?

Definition: Definition: The public sector of an economy is the sector that provides a range of governmental services, including infrastructure, public transportation, public education, health care, police and military services.

What Does Public Sector Mean?

What is the definition of public sector? Although the public sector varies among countries depending on the legislation that governs the state-owned organizations, generally it focuses on providing services that can benefit the entire society rather than just those who are using the service. Especially, in low-income countries with underdeveloped economies, the state sector plays a critical role in the delivery of public services and particularly, health. This is the different between the public vs private sector.

Non-profit organizations and the public sector work towards the provision of health-related commodities. In the developed economies, the state sector works towards the design of strategies that can drive growth in the economy. State-owned organizations focus on the implementation of economic development strategies to seize new opportunities and anticipate development challenges.

Let’s look at an example.


Examples of state-owned enterprises (SOEs) around the world include companies such as NASA in the United States, Statoil in Norway, PetroBras in Brazil, PetroChina in China, RosAtom in Russia, Dubai Ports World in the United Arab Emirates, Orange in France or DeutscheBahn in Germany, among others. These firms undertake business activities on behalf of their state governments and have a distinct legal form.

The most important feature for these state sector companies is their efficiency to combine high-quality management with long-term quality. Although many of them operate in rather complex industries with long business cycles, they are leaders in their industries and perform better in the long-term than their private peers. The state provides sources of capital to ensure participation in and control these firms, but also to enable them to anticipate business risks. Sometimes, if security risks are low, the state decides to privatize a state-owned firm to free up capital and direct it to other priorities of the state.

Summary Definition

Define Public Sector: Public sector is the section of the economy that is owned and operated by the government not private businesses or individuals.