The Four Economic Resources

Illustration by Autumn Qiu

By definition, economic resources include everything that a business makes use of in order to produce goods and services for its customers. Also called factors of production, there are four main economic resources: land, labor, capital, and entrepreneurship ability. 

Land, quite literally, is any natural resource involved in the production process, including what is on the surface. For example, let’s say there is a car manufacturing company in Florida. The land consists of what the company is built on as well as the physical building itself. However, it is important to keep in mind that while the building is considered land, the machinery and everything else inside of it is not. When an individual is in the planning process of starting a business, he/she must consider where it will be located. The land that the entrepreneur makes use of should be carefully chosen so that the business attracts customers.

The second economic resource is labor, which is the work done--both mentally and physically--by the people involved in the business. Each company’s workforce varies due to the different skill sets, motivation, and training that individuals have. Of course, the mental and physical exertion that employees put into the company are rewarded with wages, or income. 

The following economic resource is capital. Capital, or capital goods, describes the man-made materials that a business uses. Referring back to the example above, the car manufacturing company’s capital may include machinery, components used to construct a car, and tools that workers use to connect parts together. 

The last economic resource is entrepreneurship, which is the ability of an individual to take initiative to create a business. In order for a company to flourish, the entrepreneur must be willing to take a risk and combine the other three factors of production in a way that he/she envisions. Entrepreneurs possess the qualities of motivation, passion, creativity, and commitment. Once an individual starts a business, he/she has successfully completed one of the four economic resources.