What Are The Factors Affecting National Income?

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1. Factors of Production
Normally the more efficient and richer the resources, the higher the level of national income
or GNP will be.
Land
Resources like coal, iron & timber are essential for heavy industries so that they must be
available and accessible.  In other words, the geographical location of these natural resources
affect the level of GNP.
Capital
Capital is greatly determined by investment.  Investment in turn depends on other factors like
profitability, political stability etc.
Labour & Entrepreneur
The quality or productivity of human resources is more important than quantity.
Manpower planning and education affect the productivity and production capacity of an
economy.

2. Technology
This factor is more important for nations with little natural resources. The development in technology is affected by the level of invention and innovation on production.

3. Government
Government can help to provide a favourable business environment for investment.  It
provides laws and order, regulations that affect exchanges.  In HK, the government promotes
free trade and competition which encourage economic activities.

4. Political Stability
A stable economic and political system helps the allocation of resources. Wars, strikes and
social unrests will discourage investment and business activities

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