Economics
7.
Economic policies with regard to production factors
Usually used neo-liberal segmentation of economic policies distinguishes:
 markets’,
 structural
 and social policies.
But it is also possible to distinguish economic policies from pragmatic point of view:
 production factors POLICIES,
 products and services markets’ regulation POLICIES,
 regional and structural development POLICIES,
 environment and food POLICIES,
 and food - nutrition POLICIES.
The production factors policies we can logically divide to policies in relation to:
 land,
 labour,
 and capital.
So logically, the production factors in agriculture are:
 C……capital,
 L……labor,
 Lb……land.
The basic production equation is defined as Q = f ( C, L ), where
 Q…… is for production,
 C…… is for capital,
 L…… is for labour.
However, there also exists the concept of „new economy“. The notion is used since the end of
90ies for explanation of the U.S. economy unprecedented successful (combination of low
inflation, low unemployment rate and accelerated productivity growth). It uses for explanation
the impact of information and communication technologies (ITC) on the results of economic
activities. The idea is not generally accepted, however.
The basic economic equation is then modified (Solow, R.M., 1956)
Q = f ( C, L, e )




Q
C
L
e
….. product,
….. capital,
….. labour,
….. technological progress.
Qualitatively new features:
 information technologies of the new generation
 backlog - growing revenues bring about further development of technologies
 globalisation - growing role of the net sectors
 akcelerated mobility of production factors
 effective utilization of production factors
Source: Agrární politika, Doc. Ing. Miroslav Svatoš, CSc. a kolektiv
Economics
7.
Problem of agriculture:
Q = f ( C, L, Lb, e )





Q ….. product,
C ….. capital,
L ….. labour,
Lb …. land + other biological factors,
e ….. technological progress.
The possibilities of technological development utilisation are relatively limited in agriculture,
however.
Economic policies with regard to production factors:
Theoretically, also the production factors market should operate as a free market, according to
the theory of sectoral over-capacities (Koester, R). However, it does not fully work in the
economic reality, because the factor mobility differs among the individual sectors of national
economy.
The reasons are:
 universal or specific utilisation,
 legal frame/legal inhibitions,
 flexibility of factors,
 habits, traditions, historical development ( the “invisible handshake“) .
Factors influencing production factors mobility in agriculture:
1. Financial capital
 low return
 specific risks
 long turnover period / tied capital
 low liquidity of credit guaranties
 relatively high demand
 level of support
 legal frame
2. Stocks
 specific use
 problem of evaluation
 low liquidity
 limited stocking time
3. Fixed capital
 structure, structural differences
 specific/general utilisation
 differentiated liquidity
 mobile/immobile assets
 tangible/non-tangible assets
 depreciation level
 legal frame
4. Labour
 age, gender structure
Source: Agrární politika, Doc. Ing. Miroslav Svatoš, CSc. a kolektiv
Economics
7.
 flexibility
 common and specific unemployment
 rate, employment policies,
 infrastructure, housing
 ties to land
 national habits, historical traditions
 legal frame
5. Land
 physical immobility
 minimum utilisation in other sectors
 relatively limited supply
 natural conditions
 environment protection and
 formation and preservation
 historical development, relationship to land
 legal frame
According to the factors mentioned, we can form the factor mobility pyramid
for agriculture (B. Boučková):
 Financial capital
 Tangible and non-tangible
 fixed capital, stocks
 Labour
 Land
Source: Agrární politika, Doc. Ing. Miroslav Svatoš, CSc. a kolektiv