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GEOG 216 (241)

Factors of Production and Measures of Wealth

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GEOG 216
Geraldine Akman

Factors of Production and Measures of Wealth Factors of Production - Resources used to produce g/s - Goods: tangible (ex: commodities) / services: intangible (ex: retail) - Labour, capital, land - Resources = scarce relative to human’s unlimited desire for different products - Always have to make trade-offs (can do so through land, labour, capital) Labour - Relative abundance/scarcity = imp - Relative abundance: wages tend to be lower / Scarcity: relates to higher wages (cost) - Productivity: relative value of output/unit of labour - Changes w/application of machinery (productivity increases) - Health of workers - Tends to depend on provision of public goods provided by gov (health care, edu) - S/nats richer, s/poor: look at things that make labour force more productive in wealthier nat - Skill levels: unskilled, semi-skilled, sci + tech knowl, indig (local, unwritten) knowl - Entrepreneurship - Propensity to innovate + create - Special management + decis making skills  Able to be extremely productive + create techs that create a lot of wealth  Ex: Bill Gates, Steve Jobs, Mark Zuckerberg - Most entrepreneurs = copiers Capital - Finance capital - For econ to grow, necess to have access s/$ to purchase machinery, set up indus, etc.  Historical record of how nats became wealthy - Access to $ through nat savings, external loans/aid, +/foreign direct investment  Nat savings: have banking sys  Poorer nats: takes time for formal, trustworthy banking sys put into place  Have to produce enough to put into bank as savings  $ in bank to loan to ppl who want to create businesses  External loans/aid (IMF/WB)  Poorer nats ask for loans + certain amount $ put aside to help these nats  Nat to nat, multilateral sys/aid  Foreign Direct Investment  Companies like McDo, Coke, Nike decides to install ops in nat relatively unindus - Physical capit
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