Land in the economy - this is what?
Definition of land in the economyis interpreted in a broad and narrow sense. In the latter case, we are talking about specific areas of the territory. In a broad senseland in the economy isa complex of natural resources that can be used to create services, goods, other values. Let us consider this concept in more detail.
Land as a factor of production
In economicsidentify several production factors. First of all, this is labor. The use of labor yields income. Another factor is capital. These are the means that economic entities invest in their production. The third factor is land. It is of particular importance for production. Meanwhile, it is impossible to give an exact answer to the question "what is more important for the economy: land or capital". All production factors are equally important for the economic system.
Each resource used in economic activities has its own characteristics.Land in the economy isa unique resource. The main distinguishing feature of it is the limited area. In this case, a person can not change it himself. Capital or labor are more flexible factors. They are subject to change.
No activity can be conducted without land. Accordingly, ownership of natural resources is considered the most profitable.Land in the economy isthe main means of production. At the same time, the income is extracted not so much when it is sold, but for the transfer to use.
There are different sectorsin the economy of the country. Earthas a means of production is most actively used in agriculture. It grows crops that come to consumers.
Undoubtedly, in order for the resource to bringincome, it must have a number of properties. If we talk about agricultural activities, then the fertility of the earth is of great importance. It, in turn, is determined by the chemical and mechanical properties of the soil. A person can change fertility in a certain way. For this, mechanical processing is used, various sorts of fertilizers are introduced.
Depending on the person's participation, they distinguish betweenartificial and natural fertility. Meanwhile, the natural properties of the land are considered basic. They are of particular importance to the owners, determine the nature of the profit that the owners derive from the resource.
Another important propertyland in the economy islocation relative to the market.
Important is the weather, climatic conditions, relief, type of soil. They, like fertility, differ depending on the region.
The principle of diminishing returns
It should be noted that the influence of a person on the propertiesnatural resources are not unlimited. One day there will come a time in which the additional return arising from the additional application of capital and labor will be substantially reduced. As a result, a person will cease to receive income in the same volume. This regularity is called the principle of diminishing returns. For a better understanding of its essence, the following formulation can be cited:
"Every increment of labor and capital thatinvested in the cultivation of the land, entails a proportionately smaller increase in the volume of output if it did not coincide with the improvement of agricultural technology. "
The concept of the land market is considered the core of the theory of renewable resources ineconomy. The use of landas the production factor entails the emergence of such a concept as "rent".
It should be understood as a kind of a fee for the resource for the user and a special type of income for the owner.
As you know, the plots are significantly different in quality, location. At the same time, the limitations of the land fund must be taken into account.
More advantageous position for those subjects,which conduct farming in medium and best areas. Their costs are much lower than those of industries working on the worst lands. Accordingly, the first group of subjects can receive additional income. It is called differential rent I. The main reasons for its occurrence are the advantages of the territory, due to great fertility or better location.
As mentioned above, there is a natural andartificial fertility. The second is also called economic. It is associated with additional investments in the resource and expresses the intensity of the development of agricultural activities. Additional investments of subjects pay off with different efficiency. The income received from investments and ensuring intensive development of production activity is called differential rent II.
In the market economy, the concept of "nobody's land" is absent. Each site has an owner. In this case, even the worst wore any owner will not give free of charge neither in rent, nor in possession.
The income received from all lands without exception,is called absolute (net) rent. It is the result of an inelastic proposal in the face of private ownership of land. Simply put, net rent is a kind of tax, to which the owner exposes the whole society through the intermediation of tenants, taking advantage of the fact that the land resource is extremely immobile as a production factor.
Thus, we can conclude thateconomy is based on joint ownership of land.
It is very limited at both the micro and macro levels. Many farms want to expand. However, the realization of this desire is associated with a number of difficulties in the short and long term.
To the factors influencing the proposalland, include location and fertility. Accordingly, when it comes to the limited resource, we mean a site with a specific quality soil located in a certain area. It is quite logical that the number of good allotments near a large city or a separate farm is doubly limited (both in quality and quantity).
The offer of land can have a fixedcharacter. This means that the curve is not at all elastic. If the abscissa indicates the number of sotkas of land, and the ordinate - the cost per hundredth, then the line will be parallel to the axis of ordinates. This means that the offer can not be increased even if the value is significantly increased.
Problems in practice
The fertility is influenced by manyfactors: the skills of the actors working on the land, the specific technology, the quality of the soil, the climate, etc. Certainly, some of them are variable, but due to the peculiarities of capital and labor used in the agricultural sector, the change occurs only after a certain time.
In many developed countries, very muchfamily farms are common. Accordingly, the number of persons engaged in agricultural production is mainly composed of family members. The kind of their occupation, ownership of land, housing actually "tie" them to a specific territory. As a result, their mobility is severely limited.
Some of them try to find another income. For example, they arrange for part-time jobs, rent out rooms, etc. But all these sources can be considered only additional. The main earnings are still connected with agricultural activities.
At the same time, the mobility of hired agricultural workers is alsois essentially limited. Their earnings, as a rule, are much lower than salaries of industrial personnel. In addition, often income workers receive in kind (in the form of products, housing, etc.).
Within the framework of a small farm,the possibilities of replacing capital are limited. This is due to a lack of assets. However, there are some reserves to improve the quality of the soil, depending on the form of management. But in view of the specifics of agriculture, they can not change quickly. Moreover, irrational management of activities can cause damage to the land.
It is very heterogeneous. It is formed from agricultural and non-agricultural demand.
If the abscissa indicates the number of hundred, andon the y-axis - the price per hundred square meters, the slope of the demand curve will be negative. This is due to the fact that in the process of involving land resources in circulation, it is necessary to move from the best to the medium, and in some cases even the worst, sectors.
The negative slope will also be near the curvenon-agricultural demand. This is due in large part to the location of the allotment. There are also some restrictions, because the subjects have to use the territory not only in the central areas of cities, but also on their outskirts.