Determinants of Productivity Determinants of Productivity Productivity is the quantity of output formed by one unit of production input in a unit of time. Inputs used in the production of the goods and services are the major determinants of any country's productivity they are also called factors of production. There are four major determinants of productivity of any country's economy... Land: the land itself, and raw materials such as oil and minerals beneath it.

The natural resources that is available without alteration or effort on the part of humans. Land as a resource includes only unique fertility and mineral deposits, topography, climate, water and vegetation. Trees grown are not categorized as land because they have been deliberately grown on the other hand Trees in a natural rainforest are a natural resource and thus classify as land. The reward for letting others use land is called rent... Labor: In order to produce the things, a human resource must be used. human resources consist of the productive aid of labor made by individuals who work-for instance, miners, artists, and professional baseball players.

The contribution of labor to the production process can be amplified. Whenever potential workers obtain schooling and training and whenever actual workers acquire new skills, labor's contribution to productive output will raise. In other words it is human effort, mental or physical. The reward to labor is label wages... Capital: When labor is applied to land to grow wheat, for instance, something else is used. Generally it is a plow or a tractor.

That is to say, land and labor are shared with manufactured resources in order to produce the things that we need. These manufactured resources are called capital, which consists of machines, buildings, and tools. Additionally, capital consists of enhancement to natural resources, such as irrigation ditches. Money is used to buy factors of production - it is not a factor itself.

The return for investing in capital is called interest... Enterprise or Entrepreneurship: The fourth factor of production, involving human resources that carry out the functions of raising capital, organizing, managing, bringing together other factors of production, and making fundamental business policy decisions. The entrepreneur is a risk taker. Risk taking activity that utilizes land, labor and capital to produce goods or services in the expectation of a future return. That reward is term profit in economics.

For any economy the use and employment of all these factors is necessary and each of their contribution effect productivity. Thus all of these factors determine the output and productivity of any country.