Factors Which Influence the Size of the National Income

  • Availability and exploitation of natural resources. The size of the natural resource availability and the level of its exploitation, determines the size of a country's national income. The production of land depends upon fertility of the soil, latitude, and climate and irrigation system in the country. If the land is fertile, the size of the national income will be quite large, if the quality of land is poor, the size of the national income will be small
  • Size of the capital stock:- The volume of production is also very much influenced by the quality and quantity of capital available in the country. Capital now days is considered to be the lifeblood of the modern industry. If the capital consists of primitive tools, the size of the national income cannot be large. But if modern types of plants are used for production, then they can enhance the productive capacity of a country.
  • The level of technological advancement:- If the state of technical knowledge is poor in the country, the size of the national income will be small, but if advance technical knowledge is available, then the size of the national income will be large.
  • Level of human resource availability-lf the labour is efficient and its size is consistent with the means of subsistence, the size of the national income will be large and if the labour is underfed, under clothed and under-housed unskilled, and has no ambition to rise, the size of the national income will be small.

  • Investment levels;- If the level of both domestic and foreign investment is high, the size of NY will also be big and vice versa.
  • Government will and incentives:-If the government or political will is positive with regard to resource utilization and where the private sector is strong, the size of national income will be bigger and vice versa.
  • The level of industrialization (TOT):- Where the level of industrialization is high and the TOT is favourable, the size of the national income will be big and vice versa.
  • Political Stability:-Political instability greatly hampers economic progress. If there is political stability in the country, the production can be maintained at the highest level. The size of the national income Will be large. In case of political instability, the production will be adversely affected and so the size of the national income will be small.

  • Market Size: A country that has a larger domestic and external market will have a big size of national income and vice versa. r
  • Level of infrastructure: A country that has a good infrastructure will enable a big national production to take place in a number of ways.
  • Population Growth Rate:-Where the population growth rate is low, the size of the national income will be high and vice versa. This is so because a low population growth rate enables a country to save and accumulate capital.
  • The level of Monetization:- When the country is highly monetized, the output is always big due to marker incentives leading to a bigger size of the National income and vice versa.
  • Culture and Attitudes of the people:- Where there is less cultural rigidity, the national income will be big and vice versa
  • Entrepreneurial Abilities:-The size of the national income also greatly depends upon the number and skill of the entrepreneurs. If the captains of the industries are efficient, they will combine;' the various factors of production to the optimum proportion and so the volume of total production will': be quite large, if managerial skill is lacking in the country, the size of the national income will be small,
Organizational level: The size of the National income depends on the level of organization in the economy with respect to resource use and allocation.
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