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Yang Yilin
Professor Dykhuizen
Expository Writing
7 June 1999
Economics
In October 1929, stock prices fell sharply
on Wall Street, New York, and it brought
about the Great Depression (The 1929 Stock
Market Crash). The main cause was the overproduction of goods and services in many
countries. For this reason, the strongest countries
that had many colonies such as British and
France blocked their economies in order to
overcome the terrible condition. On the other hand, the strongest countries
that had few colonies such as Japan and Germany
chose Fascism and promoted wars to invade
other countries. This was the beginning of World War II. As you can see, if the economies of many
countries start to corrupt, they will be
greatly confused; what is worse, wars will
break out. To avoid the global confusion, it is important
to learn about economics. In the economics, people study factors of
production because they are extremely significant
for each country to decide what to produce,
and they can be divided into three basic
categories: labor, capital, and natural resources.
The first category in factors of production
is labor. �gIt includes all of the productive contributions
made by people working with their minds and
muscles�h( Dolan, 6). In the world, there are some countries that
are rich in labor force, such as China and
India. If these countries have enough capital and
natural resources, the countries can take
advantage of the rich labor force efficiently,
and their economies will grow rapidly. The U.S. is a good example of a country that
has enough labor, capital, and natural resources. Consequently, this good environment is the
main reason why the U.S. economy has grown
remarkably, and especially it could become
a major economic nation in the world. However, if any one of these capital and
natural resources is not sufficient in comparison
to the labor force, the economy will become
sluggish, and the unemployment rate will
become high. Today�fs China is a suitable example that
has very low capital even though the labor
force is very rich. Therefore, the unemployment rate is very
high. In order to decrease the high unemployment
rate, China wants other countries to invest
in China, and also it can help the Chinese
economy develop. However, there are several countries that
are lacking in the labor force, such as Saudi
Arabia and Japan. They are willing to accept immigrants and
foreign workers to develop their nations. For instance, Japan welcomed many foreign
labors, especially during the Bubble Period.
The second group in factors of production
is capital. �gIt includes all the productive inputs created
by people, including tools, machinery, buildings,
and intangible items, such as computer programs�h(
Dolan, 6). Needless to say, the capital is improved
by the investments of people. The improved capital can produce higher productivity
and more money. The money will be used for the investments;
accordingly, the countries will develop. For example, Japan has grown rapidly since
the end of World War II because the high
rate of savings caused vigorous investments. Another example is the U.S. with its huge
capital. It has invested the high-tech industries,
such as the computer industry for the past
few decades by using its huge capital. Therefore, the U.S. has many strong high-tech
industries, such as the computer, biotechnology,
and space industries. What is more, its economy is very successful
these years even though the other countries�f
economies are in depression.
The third category in factors of production
is natural resources. �gThey include anything that can be used
as a productive input in its natural state,
for example, farmland, building sites, forest,
and mineral deposits�h( Dolan, 6). The natural resources are the most innate
factors of production, and each country has
different natural resources. Therefore, the natural resources can strongly
limit the decision that countries make in
order to produce goods and services. For instance, Japan is surrounding with the
sea and has good harbors, such as Yokohama
and Kobe harbors. As a result, Japan is very appropriate for
fishery, and the fishing industry has been
very vigorous since the past time; additionally,
the processing industry of the fish is active
in Japan. Countries that have poor natural resources
can�ft help importing them to produce goods
and services. Kuwait is an example of the former and there
are rich deposits of oil. For this reason, Kuwait is said to be a country
floating on the petroleum. Every year, Kuwait can export the huge amount
of oil to other countries, such as the U.S.
and Japan, so people in Kuwait owe the wealthy
and comfortable life to the rich oil deposits. On the other hand, Singapore is an example
of the latter. In addition to the fact Singapore is a very
small county, and it hardly has natural resources. Therefore, Singapore imports the natural
resources and processes them to produce goods
and services. Then Singapore can export these products
to other countries. Today, its GDP is very high because the processing
industries such as the shipbuilding industry
are very successful.
In conclusion, we can clearly classify factors
of production into three main groups: labor,
capital, and natural resources. These three elements are fortunes or treasures
for each country because the factors of production
can increase GDP (Gross Domestic Product). However, not every country has enough factors
of production. If any one of these factors is short, the
GDP will not increase smoothly. Therefore, the government should adjust the
balance of the factors of production to keep
the successful economy. When the labor is short, accepting immigrants
and foreign workers is effective to make
up for the lack. When the capital is short, the investments
of other countries are very useful to increase
the capital. When the natural resources are short, importing
them from other countries can compensate
for the shortages. However, keeping the balance of the factors
of production is difficult for the government,
so economics is obviously important to make
the economy better and develop the country
smoothly.
Works Cited
Dolan, Edowin G, and Lindsey, David E. Macroeconomics. Seventh Edition. Fort Worth: The Dryden
Press Harcourt Brace College Publishers,
1994.
�gThe 1929 Stock Market Crash.�h The 1929 Stock Market Crash. <http://www.arts. unimelb.edu.au/amu/ucr/student/1997/Yee/1929.htm> (31 May. 99).
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