The Significance of the Factor Mobility

  

Date Posted: 6/16/2012 8:54:58 AM

Posted By: itakuaje  Membership Level: Bronze  Total Points: 45

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Mobility enables different factor combinations to be made into use. For instance, more capital and labour can only be used if either of these factors is mobile to facilitate a change in the production technique. This enables the producers to search for a least cost method of production.
Mobility of factors of production do facilitate the movement of factors of production from surplus areas to deficit areas. This automatically elaborates that if factors are sufficiently mobile, unemployment will consequently be avoided in surplus areas as production will be enhanced in deficit areas. This leads to a more efficient utilization of resources.

Mobility of factors of production thus enables the benefits of economic growth of a country to be spread evenly throughout. Thus,many industries are located in urban areas primarily because of the urban market and economies of scale. If at all industries can be encouraged to locate in rural areas through incentives, then the benefits of industrial development in a particular country can be spread more evenly.

Mobility of factors of production equally enables the transfer of expertise to areas where it is efficient and in demand. For instance,in the event of mobility experienced, managers can contribute to the development of aspects of the firm lacking in managerial expertise and in some cases they can transfer their skills internationally.

The possibility of vertical occupational mobility of labour can have motivational effects in that if workers perceive chances of being promoted for outstanding work, they are in general likely to be more efficient at their work therefore contributing to the overall efficiency of their business enterprise.

Mobility may also be deemed to be significant in that if workers are occasionally allowed to perform various/different tasks and are capable of performing them, then they are less likely to experience the monotony often associated with specialization

attributed by its accompanying negative effects.

Factor mobility is also significant in production in that factors of production that are immobile occupationally and have no alternative use, are considerd to have no opportunity cost and are thus not regarded by economists as scarce resources.

Therefore,the above aspects of significance of factor mobility is as idicated below:

i. Unemployment
ii. Income distribution
iii. Regional disparities
iv. Flexibility in production
v. Utilization of the otherwise idle resources
vi. Incentive to investment – Economic minimization of losses while maximizing profits/earnings.

(ii) Regional imbalance can be said ot be the uneven distribution of economic resources between different regions in a given state.
The policy recommendations to reduce regional development imbalance would include:
• Industrial decentralization.
• Human resource mobility and development – regional human resource development initiatives and participatory change in terms of cultural aspects like cattle rustling etc.
• Infrastructure – the aspect of accessibility that is to allow for efficient utilization of potential resources eg in the agricultural rural sector.
• Comprehensive development plans and strategies.
• Security, law and order eg. The influx of refugees in areas such as the North eastern Province of Kenya.
• Non-governmental initiatives and support systems eg. Micro-financing of the community development projects.
• Factor rewards’ differentials eg. Difference in wage compensation between different regions – allowances for those working in designated hardships areas etc.

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