ECONOMIC RESOURCES
Economic resources are the assets (things of value) which an economy (or business) may
have available to supply and produce goods and services to meet the ever-changing needs and
wants of individuals (in the case of a business) and society (in the case of society as a whole.)
The number of goods and services being produced in todays world is quite large that it
would be very difficult, if not impossible to produce a complete list all inputs used in their
production. For the purpose of analysis, land, labour, capital and entrepreneur are the inputs
for economic resources.
1. LAND
Land is a factor of production refers not only to agricultural land, but to all other resources
provided freely by nature. It includes minerals, fishing-ground, water ways, and forests. Land
is often said to have some distinct features of its own. This includes:
1. It is a provision of nature since nobody has done anything to bring it into existence.
This explains why land is said to have no cost of production.
2. It is limited in supply, unlike other factors of production
3. Production activities which depend greatly on land are subject to diminishing returns
to scale at a certain level of scale of production.
2. LABOUR
Labour is used to describe all human efforts utilized in the production process. This can be
manual or mental. The manual type is classified as unskilled labour because it requires little
or no education or training. This services are found among cleaners, messengers, clerks and
so on. The mental type involves skilled labour because educational training is involved. It is
found among medical doctors, pilots, engineers and so on.
Labour can be transferred from one place to another. This is known as mobility of
labour. There are two types of mobility of labour:
- Occupational mobility of labour
- Geographical mobility of labour
Occupational mobility of labour refers to the ease of labour in which labour can change
employment from one industry to another. E.g. farming to tailoring.
Geographical mobility of labour refers to physical movement from one place to another. E.g.
rural to urban. Factors affecting this movement could be family considerations, economic
considerations,
3. CAPITAL
Capital can be defined as the stock of wealth created by man to be used mainly in the
production of final goods and services. Capital includes plants, machines, industrial buildings
and so on. The term financial or liquid capital is used specifically to refer to money. The
financial capital is used to for the purpose of paying wages, and buying other inputs. Social
capitals are the infrastructures like roads, hospitals, markets, schools, railways etc.
Following are the factors of capital:
a) Fixed Capital:
It includes new technologies, factories, buildings, machinery and other equipments.
b) Working Capital:
It is the stock of finished goods or components or semi-finished goods or components.
These goods or components will be utilized in near future.
c) Capital productivity:
New features of capital building, machinery or technology are commonly used to
improve the productivity of the labor. Such as the new ways of farming helps to
enhance the productivity of the agriculture sector and give more valuable jobs in this
sector which motivates people to come out for work.
d) Infrastructure:
It is a stock of capital that is used to maintain the whole economic system. Such as
roads, railway tracks, airports etc.
4. ENTREPRENEURSHIP
The entrepreneur hires and organises the other factors of production. He decides on what to
produce, how to produce, and in what quantity to produce. The entrepreneur bears the risk of
production. He earns profit for effective management of resources or suffers a loss for laxity
and efficiency.
