FACTORS WHICH LIMITS MOBILITY OF LABOUR
- 1. Lack of required education and training. Occupational mobility becomes difficult.
- Age. The old people are less mobile.
- Family Ties. The married people are less mobile people that is they do not prefer to stay away from their families.
- Cost of movement. The cost of movement (transport) of a worker and her / his family may be high.
- Housing problems. It may be difficult to occupy a residential house for the family.
- Health difficulties. Workers with health problems such as diseases tend to be less mobile.
- Political boundaries. It requires legal passports and certificates to enable one to migrate to another country and to be allocated to get employment which limits labour mobility.
Capital refers to man made resources which helps other factors of production such as land,labour in the production of goods and services.
FEATURES OF CAPITAL
- Capital is man made resources used in production.
- Some forms of capital are highly mobile such as sunk capital while other forms of capital are immobile such as floating capital.
- Capital helps to increase the productivity of other factors of production. Example;- land with fertilizers more production and a fisher man with a fishing net catches more fish.
- The supply of capital can be increased through savings, which is influenced by high interest rate. High interest rate brings about more saving which tend to bring high capital formation.
FORMS OF CAPITAL
- Fixed capital.
Is a form of capital which is durable and does not change its form during the production process. Example;-buildings, machines, etc.
- Sunk capital.
Is a form of capital which is durable and has only one specific use.eg railway locomotive or an rice factory (produces only rice). Fixed capital fall in this category if it could not be used for any other purpose.
- Circulating capital.
Is a form of capital which not durable and changes its form at the end of the production process.e.g raw materials.
- Floating capital.
Is a form of capital which is not durable and has several uses. Examples are; – raw materials, fuel, and money.
CAPITAL FORMATION OR ACCUMULATION
Is the process of adding up stock of capital goods to the existing stock. Capital goods means the goods which are used for further production.
Capital formation depends or is influenced by saving which is affected by the level of income. That is high income levels leads to more savings and hence more capital formation.
The level of saving is influenced by the following factors;
- The level of income.ie. The higher the income, the higher the level of saving.
- The rate of interest.
- The government policy political stability.
- The willingness to save.i.e.saving habits.
- Economic stability.
- High price level reduces saving because large part of income is consumed.
- Future expectations.Eg leaving an employment one will save more.
It refers to the process of organizing the other factors of production. An entrepreneur is a person who owns the business. It is said that if land,labour and capital are left alone, they will not produce. Therefore the entrepreneur has to organize them.
FUNCTION OF ENTREPRENEUR
- Providing initial capital for starting the business.
- Bear with the risk of loss and profit (uncertainty) bearing.
- To employ new technology into the firm.
- Employ other factors of production such as land,labour and capital and reward them accordingly.
- Marketing the product i.e. finding whether the commodities could be demanded by the consumers or not.
- Making all important decisions in the firm. Such as;- what to produce, how to produce i.e. method of production to be applied, for whom to produce and where to produce.
- CHARACTERISTIC OF ENTREPRENEURSHIP
- An entrepreneur does not work alone, he must employ other factors.
- The supply of entrepreneurship skills is scarce and cannot be developed easily.
- The reward of entrepreneurship depends on efficiency of other factors and it is known as profit.
- In a small business, the entrepreneur and the organizer is the same person who is also the owner of the business.