Public Sector Businesses | Business Studies for GCSE/IGCSE - Year 11 PDF Download

The Public Sector

• The public sector plays a crucial role in mixed economies.
• Public sector companies are under the ownership and control of the government and are typically financed through taxation.
• Their primary objective often revolves around offering essential services like education, healthcare, or emergency services that might not be adequately provided by private enterprises.

Examples of Public Sector Services

• Public sector enterprises function under the authority of local, regional, or national governmental bodies.
  • Transport for London manages local transportation within the London region.
  • Caribbean Airlines operates across multiple Caribbean nations, jointly owned by the governments of Trinidad and Tobago, Jamaica, and Guyana.
  • Comboios de Portugal offers train services spanning Portugal and extending into Spain.
• Governments tend to maintain ownership of public sector entities for various reasons:
  • They hold strategic importance for the country, such as in defense or justice systems.
  • They provide indispensable services like water and electricity supply, as well as emergency assistance.
  • They offer merit goods that private businesses may not supply adequately, such as education or healthcare services.

Public Corporations

• Public corporations are state-owned entities, typically businesses that were previously privately owned and subsequently nationalized.
  • In 2022, the German government nationalized Uniper, the country's largest gas importer, in response to energy security concerns stemming from the Russia-Ukraine conflict.
  • In 2008, the UK government nationalized Northern Rock, a bank facing collapse amid the global financial crisis.
• Government ministers appoint a Board of Directors to oversee the corporation.
  • Directors are tasked with managing the corporation in line with government-set objectives.
  • While profitability may be a consideration, the primary goal of these corporations is to provide public services.
  • Governments are expected not to interfere with the day-to-day operations and decisions of the corporation.

Advantages and Disadvantages of Public Corporations

Other Public Sector Enterprises

• Certain profit-making companies have partial government ownership or control, offering shares on publicly listed stock exchanges, thereby blending the private and public sectors.
  • For instance, in the US, Amtrak, responsible for passenger trains, operates as a state-owned, for-profit enterprise with the federal government holding a majority of its shares.
• Other businesses receive funding from central and local government sources but may still impose charges for certain services.
  • The NHS in the UK provides free healthcare for citizens but requires payment for medical prescriptions, select procedures, and hospital parking.
  • In France, the government finances leisure facilities like swimming pools and public sports venues, but users are often charged a nominal fee for their use.
  • Due to budget constraints in many countries, numerous services are being privatized or experiencing inadequate funding.