four factors that constitute to development

1. Physical Capital
2. Human resources
3. Technology
4. Natural resources

Physical Capital

Improvements and increased investment in physical capital. Factories and equipment that are modern and well-maintained are more productive than physical labor. Higher productivity leads to increased output.

 

Labor becomes more productive as the ratio of capital expenditures per worker increases. An improvement in labor productivity increases the growth rate of the economy.

Human Resources

The skills, education and training of the labor force have a direct effect on the growth of an economy. A skilled, well-trained workforce is more productive and will produce a high-quality output that adds efficiency to an economy.

 

A shortage of skilled labor can be a deterrent to economic growth. An under-utilized, illiterate and unskilled workforce will become a drag on an economy and may possibly lead to higher unemployment.

Technology

Improvements in technology have a high impact on economic growth. As the scientific community makes more discoveries, managers find ways to apply these innovations as more sophisticated production techniques.

 

The application of better technology means the same amount of labor will be more productive, and economic growth will advance at a lower cost.

Natural resources

The quantity and availability of natural resources affect the rate of economic growth. The discovery of more natural resources, such as oil or mineral deposits, will give a boost to the economy by increasing a country's production capacity.

 

The effectiveness of a county at utilizing and exploiting its natural resources is a function of the skills of the labor force, type of technology and the availability of capital. Skilled and educated workers are able to use these natural resource to spur the growth of the economy.