How can economies grow when one or more of the factors of production is weak?  

Expert Answers

An illustration of the letter 'A' in a speech bubbles

One method of growing a factor of production would be importing workers. This can be done by providing visas for unskilled laborers to come take unfilled jobs or it can be by providing financial incentives for skilled workers to come from overseas in order to fill positions. The United States sometimes imports workers in order to ensure that agribusiness has enough laborers to pick crops. The United States also recruits engineers and doctors from overseas. Many universities also find top talent throughout the world's secondary schools in order to fill their medical schools.

Another method of compensating for a lack of resources is to provide cheap labor for other nation's raw materials to be processed. Many developing nations lack the infrastructure or markets needed to process raw materials into finished products. Nations provide financial incentives such as lack of worker and environmental regulations in order to cash in on a large supply of unskilled labor that is willing to work cheaply. While many state correctly that this exploits workers in the developing world, it does provide employment and allows economies in poorer nations to exist.

Approved by eNotes Editorial Team
An illustration of the letter 'A' in a speech bubbles

Factors of production include land, laborers, entrepreneurship, and capital. In order to make sure that an economy has all these elements, a government might decide to partner with another economy to share factors of production, focus on the factors that they do have, or build capacity for the factors that they lack.

Historically, when an economy lacks the land or laborers necessary to expand as much as the amount of capital and entrepreneurship will allow, they seek out places that have land and/or laborers but lack capital or entrepreneurship and then, with the entrepreneurial spirit as their excuse, exploit those factors of production.

Places with land and labor but not capital or entrepreneurship, on the other hand, tend to not seek to grow their economies until coerced by the external forces of economies that seek to utilize their land and laborers, and so these relationships tend to be uneven, benefiting the side with capital more.

Approved by eNotes Editorial Team
An illustration of the letter 'A' in a speech bubbles

"Factors of production" is the description economists use for all the resources and skills needed to produce and distribute goods. For instance, suppose the goods in question are books: the factors of production would include the skills and knowledge necessary to write the book, the raw materials required to make paper, the printing press, the ink, the skills of the cover designer, the distribution network, and all the time and space within which these people and machines operate.

Given this description, it is clear that one or more potential factors of production will be weak in any economy, since there are so many factors of production for any given product. Those responsible for planning or shaping the economy (an activity which takes place even in the most ostensibly laissez-faire capitalist societies) should therefore concentrate production in areas where the relevant factors of production are strong and readily available or where they can be obtained without too much difficulty.

The economy will be able to grow even faster if, within this category of products, producers can focus on those of high value with correspondingly high margins. Such focus and planning, even with a relatively narrow range of factors will yield better results than the inefficient use of a wide range.

Approved by eNotes Editorial Team
An illustration of the letter 'A' in a speech bubbles

If one or more of the factors of production is weak, economies will have to try to do better with the other factors of production.

For example, a country like Japan has relatively little "land."  It does not have many resources that can be used for a modern economy.  Therefore, it must do better with its labor, capital, and entrepreneurship if it is to achieve economic growth.  It will have to make sure its people are educated.  It will have to make good use of machinery.  It will generally have to utilize the resources that it does have to make up for those it lacks.

Approved by eNotes Editorial Team

We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

  • 30,000+ book summaries
  • 20% study tools discount
  • Ad-free content
  • PDF downloads
  • 300,000+ answers
  • 5-star customer support
Start your 48-Hour Free Trial