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.
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