The Difference Between the Private and Public Sector

Last updated on April 16, 2022

It is important to understand the difference between the private sector and public sector because your privacy rights will differ depending on the legislation that an organization is governed under. In essence, the private sector is composed of businesses that are privately owned, while the public sector is composed of businesses that are publicly owned. The main difference between the two sectors is who owns and controls them. The private sector is controlled by shareholders, who have a vested interest in making sure that their company makes a profit. The public sector is controlled by the government, which means that its primary goal is to serve the public good rather than make a profit.

The Private Sector

The private sector is usually composed of organizations that are privately owned and not part of the government. These usually includes corporations (both profit and non-profit) and partnerships.

An easier way to think of the private sector is by thinking of organizations that are not owned or operated by the government. For example, retail stores, credit unions, and local businesses will operate in the private sector.

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The Public Sector

The public sector is usually composed of organizations that are owned and operated by the government. This includes federal, provincial, state, or municipal governments, depending on where you live. Privacy legislation usually calls organizations in the public sector a public body or a public authority. A public sector organization is not to be confused with a public company – which is a company that is traded on a stock exchange. Examples of public companies are Microsoft, Facebook, and Coca-Cola.

Some examples of public bodies in Canada and the United Kingdom are educational bodies, health care bodies, police and prison services, and local and central government bodies and their departments.

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Video Comparison

Watch this video to learn more about the differences between both sectors:

What are the benefits of the private sector?

The main benefit of the private sector is that it is driven by profits, which means that businesses are constantly innovating and trying to find new ways to make money. This profit motive also means that businesses are more efficient than the public sector, as they are always looking for ways to cut costs and increase revenues. Additionally, the private sector provides more jobs than the public sector, as businesses are always expanding and hiring new employees.

What are the benefits of the public sector?

The main benefit of the public sector is that it is not driven by profits, which means that it can provide services that are not profitable but are still essential to the public good. For example, the government provides police and fire protection, even though these services do not make a profit. Additionally, the public sector is more stable than the private sector, as businesses can go bankrupt if they are not profitable, but the government will always be there to provide services.

Which one is more efficient?

The private sector is usually more efficient than the public sector, as businesses are always looking for ways to cut costs and increase revenues. The public sector is often less efficient because it is not driven by profits and does not have the same incentive to cut costs and increase revenues.

How do they impact economic growth?

The private sector is the main driver of economic growth, as businesses are constantly innovating and expanding. The public sector also contributes to economic growth, but its impact is not as great as the private sector.

What is the role of government in each sector?

The government plays a different role in each sector. In the private sector, the government regulates businesses to ensure that they are operating legally and fairly. In the public sector, the government provides services that are essential to the public good but may not be profitable.

Do they have different goals?

The private sector is driven by profits, while the public sector is not. This means that the two sectors have different goals. The private sector’s goal is to make money, while the public sector’s goal is to serve the public good.

What happens when there is a mix of both public and private ownership?

When there is a mix of both public and private ownership, it is called a mixed economy. A mixed economy typically leads to increased efficiency and stability, as the public sector can provide services that are essential to the public good while the private sector drives economic growth.