The private sector is the part of the
economy
An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
which is owned by private groups, usually as a means of establishment for
profit or
non profit, rather than being owned by the
government
A government is the system or group of people governing an organized community, generally a State (polity), state.
In the case of its broad associative definition, government normally consists of legislature, executive (government), execu ...
.
Employment
The private sector employs most of the
workforce in some countries. In private sector, activities are guided by the motive to earn money, i.e. operate by
capitalist standards.
A 2013 study by the
International Finance Corporation (part of the
World Bank Group) identified that 90 percent of jobs in
developing countries
A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...
are in the private sector.
Diversification
In free enterprise countries, such as the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, the private sector is wider, and the state places fewer constraints on firms. In countries with more government authority, such as
China
China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
, the public sector makes up most of the economy.
Regulation
States legally
regulate the private sector.
Business
Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for ...
es operating within a country must comply with the laws in that country. In some cases, usually involving
multinational corporation
A multinational corporation (MNC; also called a multinational enterprise (MNE), transnational enterprise (TNE), transnational corporation (TNC), international corporation, or stateless corporation, is a corporate organization that owns and cont ...
s that can pick and choose their suppliers and locations based on their perception of the regulatory environment, local state regulations have resulted in uneven practices within one company. For example, workers in one country may benefit from strong
labour unions, while workers in another country have very weak laws supporting labour unions, even though they work for the same employer. In some cases, industries and individual businesses choose
self-regulation by applying higher standards for dealing with their workers, customers, or the environment than the minimum that is legally required of them.
There can be negative effects from the private sector. In the early 1980s, the
Corrections Corporation of America pioneered the idea of running
prisons for a profit. Today, corporate-run prisons hold eight percent of America's inmates. Since it is from the private sector, their main priority is not rehabilitation, but profit. This has resulted in many
human rights violations across the United States.
[Bauer, Shane. "Private prisons are shrouded in secrecy. I took a job as a guard to get inside-then things got crazy."Mother Jones. N.p., 06 June 2017. Web. 10 June 2017.
]
See also
*
*
*
*
*
*
*
*
*
*
*
*
*
*
References
{{Authority control
Economic sectors
Capitalism