DEFINITION OF ‘FACTORS OF PRODUCTION

                             




An economic term to describe the inputs that are used in the production of good or services in the attempt to make an economic profit. The factors of production include land, labor, capital and entrepreneurship.
Economic resources are the goods or services available to individuals and businesses used to produce valuable consumer products.
The classic economic resources include land, labor and capital. Entrepreneurship is also considered an economic resource because individuals are responsible for creating businesses and moving economic resurces in the business environment infect the factors of production describe the function that each resource performs in the business environment.

Resources required for generation of goods or services, generally classified into four major group:
1.  Land (including all natural resources),
2. Labor (including all human resources),
3. Capital (including all man-made resources),
4. Enterprise (which brings all the previous resources together for production).
These factors are classified also as management, machines, materials, and money. More recently, knowledge has come to be recognized as distinct from labor, and as a factor of production in its right.
Land
Land is the economic resource encompassing natural resources found within a nation’s economy. This resource includes timber, land, fisheries, farms and other similar natural resources.
Land is usually a limited resource for many economies. Although some natural resources, such as timber, food and animals, are renewable, the physical land is usually a fixed resource.
Nations must carefully use their land resource by creating a mix of natural and industrial uses. Using land for industrial purposes allows nations to improve the production processes for turning natural resources into consumer goods.
Land includes all natural physical resources – e.g. fertile farm land, the benefits from a temperate climate or the harnessing of wind power and solar power and other forms or renewable energy.
Some nations are richly endowed with natural resources and then specialize in the their extraction and production – for example – the high productivity of the vast expanse of farm land in the United States and the oil in Alberta, Canada. Other countries such as Japan are heavily reliant on importing these resources.
Labor
Labor is the human input into production e.g. the supply of workers available and their productivity.
An increase in the size and the quality of the labor forces is vital if a country wants to achieve growth. In recent years the issue of the migration of labor has become important. Can migrant workers help to solve labor shortages? What are the long-term effects on the countries who suffer a drain or loss of workers through migration?
Labor represents the human capital available to transform raw or national resources into consumer goods. Human capital includes all able-bodied individuals capable or working in the nation economy and providing various services to other individuals or businesses.
This factor of production is a flexible resource as workers can be allocated to different areas of the economy for producing consumer goods or services.