What is factor endowment problem, Business Economics

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What is factor endowment problem?

Factor endowment Problem:

Several LDCs have a poor factor endowment than productivity and incomes both are very low according to world standards. Employees into LDCs have low productivity since they lack training or access to modern complementary resources for example, modern machinery. By using unsuitable low quality land and capital decreases the potential of their productivity. A country along with insufficient natural resources determines growth more complicated to achieve than a richly endowed nation. Conversely, many LDCs have abundant natural resources and still stay put poor for example Botswana. Still countries like Singapore and Japan both have minimal natural resources except this enjoy a high standard of living. It suggests that abundant natural resources are neither essential nor adequate condition for growth. All other factors, as like human capital, are more significant than natural resources for high SoL.


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