Non-state-owned companies are part of the private sector.
The concept of sector has different meanings. It can refer to a group of people, a series of activities or an area of a certain place. The term private also has several meanings: it is something that is developed in front of a few or that is not publicly owned.
The idea of the private sector , therefore, is usually understood in opposition to the notion of the public sector . While the public sector is made up of delegations, institutions and corporations that belong to the State, the private sector is made up of companies and organizations that are not state-owned .
Characteristics of the private sector
Private sector entities, thus, are in the hands of individuals or commercial companies . Microsoft , McDonald's and Coca-Cola , to name just a few examples, are private sector companies. On the other hand, the Ministry of Economy of a country or the TeleSUR television channel are included in the public sector, since they belong to one or more States.
Private sector actors are not under state control, although they must obviously obey its laws . Private companies and ventures, on the other hand, have a lucrative desire : their purpose is to generate profits, which remain in the power of their owners. There are public sector organizations that are not for profit (such as an NGO or a cultural society), but they are often included in a third sector known as the voluntary sector .
Those companies whose ownership is shared by the State with members of the private sector are called mixed companies .
With respect to the legal structure of the private sector, it is important to understand that it encompasses a wide range of possibilities. In other words, its development can take place in various ways from a legal point of view; A common example is the business activity run by a person who assumes the role of manager or general director, but there are many more and they also vary according to the country of residence.
Coca-Cola is an example of an entity that belongs to the private sector.
Economic importance
The economic activity of a country must be benefited by the private sector , and that is why its role is of great importance for the development of a community. The private sector can carry out the creation of any activity that does not belong to the public sector group; In the best of cases, it is intended to make considerable investments and attract third parties to make them in the country, to promote the insertion of new technologies from abroad and to collaborate with the diversification of industrial production.
As expected, the role of the private sector is closely linked to the creation of jobs for the inhabitants of its country, as well as their professional development. On the other hand, we must not leave aside the promotion of the use of renewable energy and resources, issues of vital importance for those who want a future in which the Earth does not become a hostile and uninhabitable terrain.
Limits and scope of the notion of the private sector
A point that often generates confusion when talking about the private sector is the volume that a company must have as a minimum to be part of it; The answer is very simple: there is no limit. Any activity that pursues a profit motive and that does not depend on the State must be located within this group, from a street stall selling artisanal products to a multinational company . Whenever a person works for themselves and to receive monetary income that they will use directly, their activity falls into this classification.
There is a concept that relates both sectors, the public and the private, since it consists of transferring business activities from the first to the second: privatization . This process is of a legal-economic nature and is commonly used as a measure to fight against monopolistic practices and promote healthy competition.