Production

• Production


  The creation of goods and services to satisfy the needs and wants of consumers. It may also be defined as changing inputs into outputs.
• Factors of Production


  • Land
  • Labour
  • Capital
  • Enterprise/Entrepreneural Ability
• Land


  • All the natural resources on the earth including those in the sea and the atmosphere around us. Each country in the Caribbean has various natural resources which can be used in various industries to produce goods.
• Labour


  • All human resources which are needed to combine other factors of production to produce goods and services. It refers to both physical and mental ability. This factor is rewarded with wages, salaries and or profits. It is very important since people are needed to operate equipment, program machinery, make decisions, interact with clients etc. Without it, the other factors would be useless.
• Types of Labour


  • Skilled (engineers, doctors, teachers, nurses architects etc)
  • Semi-skilled (driver, plumber, data entry operator etc)
  • Unskilled (watchman, vendor, labourer etc.)
• Factors Affecting the Labour Supply

  • Wage rate
  • Hours of work
  • Size and structure of population
  • Age at which people enter and leave the labour force
  • Religious and cultural practices
  • Adequacy of health services
  • Mobility of labour
  • Quality of labour force
  • Government policies
  • Willingness of people to work
  • Migration patterns
  • The number of women who opt to remain at home
• Productivity


  The rate at which goods are produced (efficiency of production). It may also be the relationship between the amount which is produced and all the inputs (raw materials, money etc.) which have to be used to produce those goods.
• Factors Affecting Productivity


  • Education and Training
  • The amount and quality of capital
  • Motivation
  • Working Conditions
  • Health of Workers
  • Good Management
• Areas to address in Human Resource Development

  • Education- schools, universities etc.
  • Skills- job related e.g. technical colleges and training boards, on the job training e.g. SJPP
  • Health- disease eradication
  • Nutrition
  • Working conditions
• Migration


  The permanent movement of people from one area to another. It can take two forms: rural to urban areas (domestic migration) and one country to another (international migration).
• Reasons for Migration


  • People are in search of better jobs
  • Educational opportunities
  • Better standard of living
  • Lack of social services e.g. schools, medical facilities etc. in rural areas
  • Better infrastructure- electricity, water, roads etc.
• Positive Effects of Migration

  • Workers send remittances in the form of money/goods to the families they left behind
  • It can ease the population pressure in a country with scarce resources
  • It can increase the pool of labour which organisations have to choose from
• Negative Effects of Migration

  • "Brain drain". This occurs where the skilled and professional persons leave the community or country in search of better opportunities. This hinders development (economic, social, intellectual) of the area from which the workers originated.
  • More money has to be spent on training new workers as others leave.
  • Overcrowding in the receiving area can lead to the creation of slums, health problems, pressure on services such as schools, sanitation and recreational facilities.
  • Increase in the rate of unemployment.
  • Cultural and family life can be disrupted.
• Capital


  The money and all other assets which are employed in the process of production.
• Types of Capital


  • Physical Capital
  • Working Capital
  • Fixed Capital
  • Financial Capital
  • Social Capital
• Physical Capital


  • Consists of fixed and working capital.
• Working Capital


  • Items required for the day to day operation of the business and which are continually being used up e.g. raw materials, cash etc.
• Fixed Capital


  • Items which are long lasting and are used in the production of goods and services e.g. buildings, machinery, tools etc.
• Financial Capital


  • Money which is used to run the operations of the organisation. It consists of loan capital and share capital.
• Social Capital


  • Government expenditure on factories, machinery, roads, utilities etc. The infrastructure is then used by organisations to assist in effective operations.
• Role of Capital in Production

  Capital plays a vital role in the overall production of goods/services. Money is needed for overall operation of the business e.g. purchase of equipment and raw materials, payment of wages/salaries etc. The use of fixed capital (tools, equipment) increases the productivity of labour. The amount and type of capital a firm uses depends on the size and type of industry in which it operates. With the use of capital, division of labour is made possible which in turn can increase the level of productivity/output per person. Capital is also used for investment into various capital ventures.
• Enterprise/Entrepreneurship


  • The ability to coordinate and combine the various factors of production in an effort to successfully run the organisation. The entrepreneur is often seen as the fourth factor of production. This role is also carried out by the various managers within businesses. Without it production is not possible.
• Functions of an Entrepreneur

  • Creation of ideas
  • Takes the initiative and risks
  • Raises finances to fund production
  • Determines what, for whom and how much to produce
  • Ensures that factors are used in the correct proportions
• Benefits of Being Self-employed


  • Receives all profits
  • Can set own hours
  • Makes all decisions and reports to no one
  • Close personal relationship with clients
• Problems of Being Self-employed

  • Bears all losses
  • Work long hours
  • May not always get a salary
  • May find it difficult to acquire loans
• The difference between production and productivity is that production is the creation of goods and services, while productivity is the rate at which those goods are produced (efficiency of production).
• The factors of production are land, labour, capital, and enterprise/entrepreneurship. An example of land is natural resources, an example of labour is skilled workers, an example of capital is machinery, and an example of enterprise/entrepreneurship is the ability to coordinate the factors of production.
• Migration is the permanent movement of people from one area to another, either from rural to urban areas (domestic migration) or from one country to another (international migration).
• Effects of Migration


  • Positive: Workers send remittances, it can ease population pressure, it can increase the pool of labour
  • Negative: Brain drain, more money spent on training new workers, overcrowding in receiving area, increase in unemployment, disruption of cultural and family life
• Factors Affecting Productivity


  • Education and Training
  • The amount and quality of capital
  • Motivation
  • Working Conditions
  • Health of Workers
  • Good Management
• Capital Necessary for Running a Business

  Financial capital, which consists of loan capital and share capital, is necessary for the day-to-day operations of a business, such as purchasing equipment and raw materials and paying wages.
• Factors Affecting the Labour Supply

  • Wage rate
  • Hours of work
  • Size and structure of population
  • Age at which people enter and leave the labour force
  • Religious and cultural practices
  • Adequacy of health services
  • Mobility of labour
  • Quality of labour force
  • Government policies
  • Willingness of people to work
  • Migration patterns
  • The number of women who opt to remain at home
• Subsistence Production


  The production of goods to satisfy one's own personal needs, such as a kitchen garden or sewing one's own clothing.
• Benefits of Subsistence Production

  • It saves money
  • One of a kind items are created
  • Creativity can be explored
• Domestic Production


  The production of goods/services for the local market.
• Benefits of Domestic Production


  • Use of local inputs e.g. labour, capital, raw materials etc.
  • Provision of jobs
  • Reduces imports
  • Reduces the use of foreign exchange
  • Economy may become self-sufficient
• Surplus and Export


  The production of goods above what is needed to supply domestic needs, with the surplus sold on the international market.
• Benefits of Surplus and Export

  • Foreign exchange earned
  • The development of an external market
  • Jobs
  • Can improve Balance of Trade and current account of Balance of Payment
• Types of Production


  • Extractive/Primary Sector
  • Manufacturing/Secondary Sector
  • Construction
  • Service/Tertiary Sector
  • Quaternary Sector
• Extractive/Primary Sector


  • Involves the extraction of basic raw materials from the land e.g. mining, agriculture, fishing, forestry. Some of these resources can be used directly or are used as the raw materials of other industries to be converted to other goods.