The public sector is the part of the economy where goods and services are provided by the

government or local authorities. These goods and services are sometimes provided free and in
other cases consumers have to pay a price. The aim of public sector activity is to provide
services that benefit the public as a whole. This is because it would be difficult to charge
people for the goods and services concerned or people may not be able to afford to pay for
them. The government provide these goods and services at a cheaper price than if they were
provided by a profit making company. The public sector accounts for about 40% of all
business activity.

The private sector consists of business activity that is owned, financed and run by private
individuals. These businesses can be small firms owned by just one person, or large multi-
national businesses that operate around the world (globally). In the case of large businesses,
there might be many thousands of owners involved. The goal of businesses in the private
sector is to make a profit.

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Private sector vs. public sector

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Last Updated: January 6, 2009

Basically, there are three types of economies, private, public and mixed. Private sector
is the part of an economy which is run mainly for private profits and is not governed
by the state. Talking about the public sector, the economy is governed by the state
only, and in a mixed economy, some part of the economy is governed by the state and
other is governed by private companies and organizations.

As compared to public sector, schools, training institutions and colleges which are
owned by private sector show better results. Also, it has been seen that privately
governed hospitals and clinics also receive more patients with an expectation to
receive better treatment procedures. Almost every type industry is established in a
private economy and most of the privately owned companies possess the ability to
provide better services to the people. While public sector usually gets caught in
corruption, bribery and laziness, workers in private companies are believed to be more
efficient and proficient and thus provide better quality services to the consumers.

Earlier, people did not used to invest their money into the economy and they wanted
to keep all the money they owned in their lockers only. But now they have started
realizing the importance of making investments at work and thus are circulating more
money to get momentum. When the money comes out of the lockers and gets
circulated in the economy, more amount of money is generated and in this way,
people of private sector become able to serve their economy in a better manner. In
order to serve better to their customers, private companies have more job
opportunities and are always ready to welcome qualified prospects. Hiring more
professionals means increasing production and this leads to further generation of
employment opportunities.
In a mixed economy, the public sector does not provide much employment
opportunities to the citizens and that is why more and more qualified people turn to
the private sector to seek employment. Apart from that, there are more chances of
promotion in private companies, as compared to public sector in which even the hard
working and efficient workers have to wait for their turn for seniority.  Private
companies help the state in providing better training, better education and better
environment to the citizens of the nation which had to be the responsibility of the
government. As compared to private sector, employees in the public sector are more
vulnerable to indulge in scams, muddles, scandals, bribes, licenses, selling quotas and
corruption and thus they discourage people who want to move ahead in the economy.

Undoubtedly, private sector has created fascination and curiosity to a wide range to
tumble the task of status in the national economies. Apart from that, it has also taken
active steps for enhancing scope of the private ownership in addition to development
of the private sector. Even the public sector companies have been handed over to the
private companies and because of the better performance of private companies,
privatization has become quite acceptable in almost every part of the world. Because
of the competition in the market among different private companies, each and every
private company works in a better way to be better than the competitor and in this
manner, private companies are bound to provide better services at competitive prices.
While public sector works on the basis of monopoly and in the lack of their
competitor in the market, they tend to work as per their own rules and as per their own
schedule.