Economic Growth and Factors of Production
The Economic Development of a country can be identified as the increment of the number of goods and services manufactured by the number of people living in that nation at a specified time. Economic growth can also be defined as in cases of inflation of the market worth, which is ascertained as a percentage of rises in the gross domestic product. For the nation’s economy to rise, production factors are engaged which directly affect growth in the economy of the nation.
According to Fischers, J et al., (2010), their study consider land a factor of production towards economic growth. Land signifies the natural resources that a state has for the manufacture of goods and services for distribution and supply. Land does not have geographical mobility since it is forever fixed. It creates the most important raw materials that are manufactured from the earth in terms of renewable or either non renewable form. Minerals for instance coal and gold are characterized in this factor and are both non-renewable resources. On to the other hand, renewable resources are those from the natural environment and can change into capital commodities (Fischers et al 2010). Furthermore, a perfect illustration of renewable resources is when man converts natural oil to petrol which is money oriented.
In addition to the factors of production, labor is also considered. Noe, R et al., (2017) explains that human beings are crucial factors aside from being consumers. These human beings give social power required in the course of creation. The rate of work force in a nation is ascertained by the level of education and the capability to motivate workers. The value can also be predictable in form of productivity. For instance, the cost per hour, day and month for every produce by a certain employee is predicted. Nevertheless, the capability of labor as a factor of production depends on the age, rank in terms of education, nutrition state and the body health. The quality of energy is determined by the quantity of labor and the effectiveness in which it is performed (Noe et al 2017). A good example is the United states where the bureau of statistics measures the work force and the report is released which entails the up to date employment details in the nation.
Capital is all human being made machinery and tools. Through capital, both labor and land contribute in the production of products such as chemicals. Cotter, J (2016) has categorized capital into three types. They include fixed, working, and liquid capital. Fixed capital is the amount of cash devoted in the fixed assets. Fixed asset include infrastructure, machinery, buildings, permanent advancement on land such as street, fences and irrigation systems. Working capital is the one used in the everyday trading activities and calculated as current asset deducted from current liabilities. Working capital includes goods such as animal feeds and fertilizers. Thirdly, liquid capital gives cash at hand, deposits to the banks, dividends and shares in finance centers (Cotter 2016). All other factors of production are capital driven and oriented.
Entrepreneurship which is also referred to management is the capability to begin and run a commercial activity. For the activity to take place land, labor and capital are important to consider. For a result oriented and successful business to smoothly run, the top management has to be aware and can decide how, where and how to merge labor, capital and land together to get the best product possible. Top management is decisive for the plans that bear risks and effects as a result of their decisions. When the inventions and innovations become successful they bring a positive impact in the creation of jobs in return contributing to the venture and growth of the economy of a country.
A country’s economy is determined by four factors where by the factors are affected by some external and internal factors which automatically affect the growth. It is therefore a necessity for a good administration of nation to carefully plan for the usage of the four factors of production to get an efficient growth in the economy.
References
Cotter, J . (2016). New Materalism and the Labor Theory of Value.
Fischer, G., Prieler,S., Van, H., Berndes, G., Faaij, A., Londo, M., Wit, M. (2010). Biiofuel Production Potentials in Europe:Sustainable use of Cultivated Use of Cultivated Land and Pastures, Part 2: Land use Scenarios. Biomas and Bioenerg 34(2) , 173-187.
Noe, R., Hollenbeck, J., Gerhart, B., Wright, P.,. (2017). Human Resource Management: Gaining a Competitive Advantage .