Private Sector

Private Sector, part of the economy that is not owned or controlled by the state. It includes personal and corporate private enterprise, including what are known as public companies (those in which there is a market for members of the public to buy shares). After World War II, in many countries governments organized a shift from the private sector to the public sector. The countries that fell under the influence of the Union of Soviet Socialist Republics adopted centrally planned economies with maximum state control. In the United Kingdom, the Labour government elected in 1945 firmly believed in the principle of common ownership, and that it was better for the public sector to run certain “essential” industries and services. Its extensive programme of nationalization included taking control of the Bank of England, the coal industry, most hospitals, transport, and the gas, electricity, and iron and steel industries. Since the 1980s, as a result of the policy of privatization championed by Margaret Thatcher, there has been a big shift in economic activity away from the public sector in the United Kingdom as many large state-owned companies have been sold to the private sector. Many other countries have also been following the trend by reducing the public sector in favour of the private sector, including, most notably, the former Communist countries of Eastern Europe and what was the Soviet Union, where there always was a small private sector even if it was not officially acknowledged. Even in current Communist states such as China and Vietnam, there has been a remarkable shift in emphasis towards private enterprise. Many African countries, which followed socialist economic principles, are now the too encouraging growth of a private sector.

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