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Definition

public sector

The public sector is that portion of an economic system that is controlled by national, state or provincial, and local governments. 

In the United States, the public sector encompasses universal, critical services such as national defense, homeland security, police protection, fire fighting, urban planning, corrections, taxation, and various social programs.

The public sector overlaps with the private sector in producing or providing certain goods and services. The extent of this overlap varies from country to country, state to state, province to province, and city to city. This overlap is most often seen in waste management, water management, health care, security services, and shelters for homeless and abused people. 

Sometimes, service providers move from the public sector to the private. This is known as privatization, and has been taking place in recent years on a large scale throughout the world. In other instances, a service may shift from the private sector to the public. This is less common, but health care is one area where some governments are providing or experimenting with services previously furnished by private providers.

Governments routinely hire private corporations to provide goods and services for the public sector, a practice known as outsourcing. Examples include the manufacture, construction or maintenance of aircraft, military hardware, electronic and communications equipment, computers, roads, freeways, bridges, parks and recreation areas.

See also: public-private partnership

This was last updated in March 2015

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