Factors of production are considered the basic building blocks of the economy. They are the resources people use to produce goods and services.
Economists tends to break it down into four categories:
- land
- labor
- capital
- entrepreneurship
Technology is not a separate category because it influences each. This can be defined as software, hardware, or a combination of both used to streamline organizational or manufacturing processes. It is a facilitator of the factors of production, much in the same way as money.
The economic production tied to a particular currency is what gives it value. The US dollar is the most widespread currency in history due to the economic productivity that is tied to it. This is why the USD is stronger than the JPY. When comparing the economic productivity of the two nations, along with the USD being used globally, it is easy to see the difference. When it comes to trade, the former reigns supreme.
Other Factors
There are many factors that can influence economic production. These might not be direct yet do have an overall impact.
Some examples are:
- government structure
- education level of citizens
- demographics
- climate
- level of advancement of banks and other financial institutions
These factors also feed into technology and money. All components contribute to create differing levels of economic production between countries.