FACTORS AFFECTING NATIONAL INCOME.


FACTORS AFFECTING NATIONAL INCOME
FACTORS OF PRODUCTION.
·        Natural resources – if an economy has a plentiful supply of natural resources it may help it to expand.
·        However, natural resources on their own are not enough. There also have to be the skilled people to exploit the opportunities.
ü CAPITAL
·        More capital generally means more production, and more production means more growth.
·        To get capital, countries have to invest and so the level of investment may be a big determinant of future growth.
ü LAND
·        Resources like coal, iron & timber are essential for heavy industries so that they must be available and accessible.
ü LABOUR & ENTREPRENEUR.
·        The quality or productivity of human resources is more important than quantity.
·        Manpower planning and education affect the productivity and production capacity of an economy.
2. TECHNOLOGICAL PROGRESS.
·        This is perhaps the most widely accepted source of economic growth.
·        This is because technology makes it possible to produce more from the same quantity of resources (or factors of production). This boosts the potential level of output of the economy. The pace of technological change will depend on :
-         The scientific skills of the country.
-         The quality of education.
-         The amount of GDP devoted to research and development.
3. GOVERNMENT.
·        Government can help to provide a favorable business environment for investment.
·        It provides laws and order, regulations that affect exchanges.
·        The government should promotes free trade and competition which  encourage economic  activities.
4. POLITICAL STABILITY.
·        A stable economic and political system helps the allocation of resources.
·        Wars, strikes and social unrest will discourage investments and business activities.


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