The factors of production are the resources that are expended in the production of goods. Among them, material (property) and human resources are distinguished.
Among the property factors of production, raw materials and capital are distinguished, human - labor and entrepreneurial ability. All of these factors are interchangeable due to resource constraints. They can be used in various combinations and proportions.
All factors of production (economic resources) bring profit to their owners in the form of rent (from land), interest (from capital), wages (from labor) and profit (from entrepreneurship).
Natural resources
Natural resources include land, minerals and water resources. This is all that nature has provided for human use. Natural resources are the raw material for production.
The natural factor reflects the influence of nature on the production process and the use of natural sources of energy and raw materials in it. Despite the importance of this factor, it is a passive element of production.
Investment resources
Investment resources are also called capital. These include buildings, structures and equipment. Investment resources are not only factors of production, but also its sources. If assets (financial resources) are directed to the sphere of production, then they are also called capital investments.
Capital can be presented in various forms. For example, in the form of fixed assets that can add working capital (working capital). As for financial capital (securities), it does not belong to the factors of production, since is not included in the real sector of the economy.
Labor resources
Labor resources are a separate category of production factors that include the physical and mental abilities of people. The labor factor in the production process is represented by the labor of the workers employed in it. When labor is combined with other resources, the production process is initiated.
The importance of labor resources in the production process is due to the fact that its course and the final result depend on them. The labor factor affects the efficiency of production not only in the amount of labor, but also in the quality and efficiency of labor. That is why, in addition to the labor factor, such a criterion as productivity is used in the analysis.
Entrepreneurial talent
Entrepreneurial ability is the factor that binds all production resources. This is the ability to competently organize the production process, make optimal management decisions, as well as introduce innovations into production and carry out modernization.
