User:Zenith.mahat

Process of Economic Development: 5 Contributing Factors'

Factor # 1. Natural Resources: Resources created not through human effort but available from nature and transformed into productive resources have been playing an important role in the development process of a country.

In other words, natural resources, such as land, soil, mineral deposits (like iron ore, fossil fuel) are three main factors of production, the other two being labour and capital. The critical element here is the availability of such resources.

Factor # 2. Human Resources: Labour is a basic input for virtually all production. It is not possible to make the best possible utilisation of existing natural resources unless there is sufficient manpower. If a country is able to utilise its man­power properly, it will certainly prove to be an important factor in development.

Factor # 3. Capital Resources: Increases in labour and land productivity, in their turn, depend greatly upon new technology and increased capital resources. The amount of output that workers can produce depends largely on the availability of complementary resources like capital. It is argued that lack of capital is the principal obstacle to growth and no plan for economic development will succeed unless adequate capital is forth­coming. No country can achieve higher growth if certain minimum rate of capital formation is not realised.

Factor # 4. Technology: Technological progress is considered as the most important source of development by many economists. It is said that technology has been revolutionising our lives since the dawn of human history. Modem day technological progress that is going on is something unique as far as its depth and rapidity are concerned. Technology refers to our knowledge of how to convert resources into goods and services. Technical progress refers to an improvement in the art of production. Technological progress leads to an improvement in productivity of existing resources.

Factor # 5. Institutional Environment: Further progress of present day market economies is now largely influenced by the institutional environment. In other words, market economies can flourish provided an appropriate institutional environment prevails. Development requires effective state participation. In today’s changing world, state should complement market.