MNEMONIC FOR SOME COMMON FACTORS INFLUENCING / DETERMINANTS

G R E A T P S A L M S K I P I L

Government policy of investment / The

•determines the cost of production
availability of incentives to investors
The level of exploitation of natural resources
(availability of natural resources and the ability to •influences the supply of raw materials / factor inputs
bring them into use )
Entrepreneurship skills / •mobilise other factors of production to increase investment and
entrepreneurial ability resource utilisation
•influences the use of funds by public officials and the cost of doing
The level of accountability business in the private sector

The techniques of production / The •influences efficiency of other factors and the level of resource utilisation Or
influences the productivity or effectiveness with which natural resources, capital
level of technology and labour are used and worked to produce goods
• political stability gives confidence to investors due to assurance of security to life and property
Political atmosphere • insecurity disrupts production activities and creates fear among investors due to possible loss of life and
property

•detemines the amount of investment capital available for buying

The level of savings
land, machines, inputs etc.
•influences work effort and the possibility of changing the
The attitude to work
methods of production

The level of skills of labour •determines the level of efficiency and productivity of labour

Market size •influences the amount of sales and profits generated

The size of the subsistence sector / the

•influences productivity and level of resource utilisation
level of monetisation of the economy
•determines the amount of funds available for investment and
The existing stock of capital buying the machines and tools which influence the productive
capacity of the economy
The level of infrastructural •influences the cost of production and the mobility of factor
development inputs , labour and final products to where they are needed

Population growth rate

• determines the dependence burden and how this impacts on the level
of savings and investment of the working population
The rate of inflation / The degree of •influences the cost of production and the profitability of the
price stability investment
•determines ease of access to land for new investment and
The land tenure system expansion of existing investments

Relate points to RIPO in your explanations; where R= Resource utilisation I= investment P=

production of goods and services O= output
Remember to give a two sided explanation of encouraging and discouraging

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 G R E A T P S A L M S K I P I L

COMMON LIMITING FACTORS OR CHALLENGES FACED

• increases the cost of production and reduces the profits hence
Limited incentives offered to investors discouraging investment and production
• due to operation at excess capacity and failure in the agricultural sector hence
Limited supply of raw materials limiting access to cheaper sources for the supply of raw materials
Limited or poor entrepreneurship / •limits mobilisation of other factors of production hence limiting investment
entrepreneurial skills and resource utilisation
•increases misuse of funds by public officials in their personal interests or increases
Low level of accountability the cost of doing business in the private sector hence reducing investment
undertaking
Poor techniques of production / Poor • reduces the efficiency of other factors and the level of resource utilisation
technology hence reduced returns on investment
• creates fear among investors curtailing the running of economic activities due to
Poor political atmosphere absence of security to life and property hence disruption of production activities

Limited savings • reduces the amount of investment capital available for buying land,
machines, inputs etc.
Conservatism of some of the local people • reduces work effort and reduces the possibility of changing the methods of
/ cultural rigidities production
Limited skills of labour / limited supply of
•reduces the level of efficiency and productivity of labour
skilled labour
Limited or small market (size) • reduces the amount of sales and profits generated leading to low production

low level of monetisation of the economy • reduces productivity and resource utilisation hence hindering development

Limited capital • reduces the amount of funds available for investment & reduces capacity to
exploit resources
• increases the cost of production and reduces the mobility of factor inputs , labour
Poor or underdeveloped infrastructure and final products to where they are needed to facilitate further production hence
leads to inefficiency, lower productivity and lower profitability.
•increases the dependency burden which reduces the level of savings and
High population growth rate investment among the working population
High rate of inflation / high levels of price •increases the cost of production and reduces the profitability of the
instability •investment
• reduces access to land to those in need of it for expansion of existing
Poor land tenure system investments and setting up new investment and discourages use of modern
methods of production thus discouraging production

Relate points to RIPO in your explanations; where R= Resource underutilisation I=limited

investment P= limited production of goods and services O= limited output

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 G R E A T P S A L M S K I P I L

MEASURES BEING TAKEN POSSIBLE LINE OF EXPLANATION using IS {Don’t

limit yourself to this presentation please! Broaden
the spectrum}
Providing incentives to investors • This is reducing the cost of production and increasing the profits
•through making better use of rich natural resources and modernising
Increasing local supply of raw materials
agriculture to develop cheaper sources for the supply of raw materials
Encouraging the development of entrepreneurship •enabling mobilisation of other factors of production to increase investment
/ entrepreneurial skills through training and resource utilisation
Encouraging proper accountability / • ensuring the proper use of funds by public officials by bringing greater financial
discipline and reducing the cost of production in the private sector hence facilitating
fighting corruption investment undertaking
Improving the techniques of production through
inventions and innovations / Promoting
• increasing the efficiency & productivity of other factors and the level of
technological development or transfer resource utilisation hence increased returns on investment
• giving confidence to investors to smoothly run economic activities due to assurance
Improving the political atmosphere of security to life and property and reducing the disruption of production activities
• increasing the amount of investment capital available for buying land, machines & tools ,
Encouraging savings inputs etc. or increasing supplies of capital goods through investment to raise the
productive capacity of the economy
Fighting conservatism through • enhancing work effort and increasing the possibility of changing the
sensitisation methods of production
Improving the skills of labour through • increasing the level of efficiency and productivity of labour resulting in higher
training productivity of resources.

Widening the market size • increasing the amount of sales and profits generated

Monetising the economy

• increasing productivity and resource utilisation thereby encouraging
production on a large scale for exchange
Providing affordable loans / credit / start • increasing the amount of funds available for raising the level of investment &
up capital increasing capacity to exploit resources
• reducing the cost of production and easing the mobility of factor inputs , labour
Developing infrastructure
and final products to where they are needed to facilitate further production
• reducing the dependency burden which increases the level of savings and
Controlling the population growth rate
investment among the working population
• reducing the cost of production and increasing the profitability of the
Controlling inflation / Stabilising prices investment /reducing uncertainty and encouraging companies / individuals
to invest
Changing or improving the land tenure • easing of access to land to those in need of it for investment and
system expansion
Relate points to RIPO in your explanations; where R= increased resource utilisation I= increased
investment P= increased production of goods and services O= increased output

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