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B. Global Inequalities: Economic Development and Quality of Life · Global Inequalities: Economic Development and Quality of Life

What Helps an Economy Develop? Factors of Development

B3.8About 50 minutes
Learning goals
  • I can explain the factors of production: land, labour, capital and entrepreneurship.
  • I can describe physical, human, political and historical factors that can help or hinder economic development.
  • I can analyse a country's situation and identify the factors that most affect its development.

Words to know

economic development
Growth in an economy that raises income and improves people's standard of living and quality of life.
factors of production
The resources needed to produce goods and services: land, labour, capital and entrepreneurship.
capital
Money, machines, buildings, tools and infrastructure used to produce goods and services.
human capital
The skills, knowledge and health of a population that make people productive.
infrastructure
Basic systems a society needs: roads, railways, ports, electricity, water and sewage systems, internet.
landlocked
Having no coastline on an ocean or sea, so trade by ship must pass through other countries.
diversified economy
An economy that earns money from many different industries instead of depending on one product.
colonialism
When one country takes control of another people's land and resources, often for the colonizer's benefit.

Hook: starting a lemonade stand

To run a summer lemonade stand you need lemons and water (land: natural resources), someone to make and sell it (labour), a table, jug and cups (capital) and someone with the idea who takes the risk (entrepreneurship). Countries need the same four things, on a much bigger scale.

A wooden table on a lawn with a pitcher of lemonade, a bowl of lemons and a stack of paper cups.
A lemonade stand needs land (lemons and water), labour, capital (table, jug and cups) and entrepreneurship. Countries need the same four factors. AI-generated image
LEMONADE50¢Landlemons, water, sugarLabourpeople who make and sellCapitaltable, jug, cupsEntrepreneurshipthe idea and the risk
The four factors of production at a lemonade stand. A country needs the same four, on a much bigger scale.

The factors of production

  • Land: all natural resources: soil, water, forests, minerals, oil, fish, climate.
  • Labour: people who work, and their skills and health (human capital).
  • Capital: money for investment, machines, buildings and infrastructure.
  • Entrepreneurship: people who start businesses and bring the other factors together.

A region that has, or can get, these factors is more likely to develop. A region missing one may struggle even if it has the others.

Type of factorCan help developmentCan hold development back
Physical geographyFertile soil, good climate for crops, rivers and coastlines for trade, valuable resourcesBeing landlocked, frequent droughts, floods or earthquakes, tropical diseases such as malaria
HumanEducation, good health, skilled workersLow literacy, poor health, many people unable to work
EconomicInfrastructure, investment, trade with many partners, a diversified economyFew roads or little electricity, heavy debt, dependence on one export whose price swings
PoliticalStable, fair government, rule of law, low corruption, peaceConflict, corruption, unstable government
HistoricalLong periods of peace and investmentColonialism that took resources and drew borders without regard to peoples; slavery; war
Factors that can contribute to, or limit, economic development. No single factor decides a country's future.

Factors work together

Geography matters, but it is not destiny. Switzerland is landlocked and mountainous, yet it is one of the richest countries in the world: it has a stable government, a highly educated workforce, and good transportation links to its neighbours. Other countries have valuable resources, but conflict or corruption keeps the wealth from reaching most people. Sometimes people call this the resource curse: a country rich in a resource may come to depend on it, and fighting over it can harm development.

History matters too. Many countries in Africa, Asia, the Caribbean and the Americas were colonized. Colonial powers often built railways only from mines and plantations to ports, so goods could be shipped out. When these countries became independent, many inherited economies built around exporting a few raw materials. In Canada, colonial policies also took land and resources from First Nations, Métis and Inuit peoples, which still affects communities today. You will look at this in the lesson on quality of life in Canada.

LandlockedcountryNeighbourcountrySeaportOceanbordercustoms andpaperworktransportfeesEvery extra step adds time and cost. (Not to scale.)
Why being landlocked can make trade harder: goods must cross another country to reach a seaport, adding border crossings, fees and delays.
Worked example

Let's analyse a country's factors

Fictional Riverland: a landlocked country with fertile river valleys, good rainfall, gold mines owned by foreign companies, adult literacy of about 50%, few paved roads outside the capital, and a peaceful election last year. Identify factors that help and hinder its development.

  1. Helps: fertile valleys and good rainfall (land for farming), gold (a valuable resource), peace and a recent election (political stability).
  2. Hinders: being landlocked (exports must cross other countries), foreign ownership of the mines (much of the profit may leave the country), low literacy (fewer skilled workers), few roads (hard to get crops to market).
  3. Most important to fix? A strong answer picks one and explains: for example, roads would help farmers sell crops and lower costs for every business; or education builds skills for many industries in the long term.

Riverland has helpful resources and stability, but its landlocked location, foreign-owned mines, low literacy and weak infrastructure hold it back.

Hands-on activity

Factors of production in my community

You need: paper and a pencil, and a short walk or drive with a grown-up (or a look at a local business's website).

  1. Choose one local business: a farm, a bakery, a garage, a dentist.
  2. List its land (resources), labour (who works there, what skills), capital (equipment, building, vehicles) and entrepreneurship (who started it).
  3. Ask: what infrastructure does it rely on (roads, electricity, internet, water)?
  4. Imagine one factor disappeared, for example the internet went down for a month. What would happen?

Look for: all four factors identified, at least three pieces of infrastructure, and a realistic prediction.

Just for fun

If you run a lemonade stand and your little brother drinks half the lemonade, an economist would say your labour force is also your biggest customer who never pays. Time to renegotiate.

Your turn

1

Name the four factors of production.

2

What is human capital?

3

Why can being landlocked make trade harder?

4

Give one example of infrastructure and explain how it helps an economy.

5

Why is depending on a single export risky?

6

How can corruption hold back development?

7

Name a landlocked country that is very wealthy, and one reason why.

More practice: warm-up

1

Which factor of production includes oil, soil and fish?

2

Which factor includes machines and buildings?

3

What does a diversified economy mean?

4

Is a peaceful, stable government a help or a hindrance to development?

5

What is an entrepreneur?

More practice: on your own

1

Explain how malaria can affect a country's economy, not just its health.

2

Why might railways built in colonial times not help a country develop today?

3

How can education help a country move from primary to secondary and tertiary jobs?

4

Two countries have the same oil reserves. One becomes rich and the other does not. Suggest two reasons.

5

Why do businesses invest in places with good infrastructure?

Challenge

1

Rank these for a fictional country with low literacy, little electricity and peace: (a) build power lines, (b) build schools, (c) build a stadium. Justify your ranking.

2

Explain how physical and political factors can combine to keep a region poor.

3

Is geography destiny? Argue a position using at least two examples.

Check your understanding

Quiz

1.

Which is NOT a factor of production?

2.

A country with no coastline is called…

3.

Which is an example of infrastructure?

4.

Why is relying on one export risky?

5.

Switzerland shows that…

6.

Human capital means…

For parents and teachers

What this lesson is about: factors that can contribute to economic development (B3.8), including the factors of production (land, labour, capital) named in the curriculum.

How to help at home:

  • Use a family business, job or volunteer group as a real example of land, labour, capital and entrepreneurship.
  • Encourage "it depends" thinking: no single factor explains a country's wealth.

Common difficulties:

  • Believing countries are poor because of their climate or their people. Steer toward a mix of factors, including history (colonialism) and political choices.
  • Confusing capital (machines, money) with a capital city.