Factors affecting size of national income, Managerial Economics

Factors affecting the size of  National Income

The size of nation's income depends upon  the quantity and quality of the factor endowments at its disposal. A nation will be rich if its endowments of natural resources are large, its people are skilled, and it has a useful accumulation of capital assets.  The following points are of interest:

a)         Natural Resources

These include the minerals of the earth; the timber, shrubs and pasturage available; the agricultural potential (fertile soil,  regular  rainfall, temperature or tropical climate); the fauna and flora; the fish; crustacea etc of the rivers and sea; the energy resources, including oil, gas, hydro-electric, geothermal, wind and wave power.

b)         Human Resources

A country is likely to prosper if it has a large population; literate and numerate sophisticated and knowledgeable about wealth creating processes.  It should be well educated and skilled, with a nice mixture of theory and practice.  It should show enterprise, being inventive, energetic and determined in the pursuit of a better standard of living.

c)         Capital Resources

A nation must create and then conserve capital resources.  This includes not only tools, plant and machinery, factories, mines, domestic dwellings, schools, colleges, etc, but a widespread infrastructure of roads, railways, airports and ports.  Transport creates the utility of space.  It makes remote resources accessible and high-cost goods into low-cost goods by opening up remote areas and bringing them into production.

d)         Self-sufficiency

A nation cannot enjoy a large national income if its citizens are not mainly self-supporting.  If the majority of the enterprises are foreign -owned there will be a withdrawal of wealth in the form of profits or goods transferred to the investing nation.

e)         Political Stability

Posted Date: 11/28/2012 5:58:26 AM | Location : United States

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