Land is a passive factor of production, as it itself cannot produce any thing. It is the labour who makes use of land. Land is an indestructible factor of production, as land is “never destroyed. It will never be out of use.
Two main characteristics of land which distinguish it from other factors of production:
1. Land is Immobile: Land cannot physically move from one place to another whereas capital, labour and entrepreneur are all mobile factors of production.
2. Effect of Laws of Returns: Since land is a fixed factor of production, the laws of returns are more effectively applicable on it. Use of capital and labour etc. can be varied over time.
3. Importance of Land as a factor of Production—In every kind of production, we have to use land.
Therefore land is a basic factor of production.
In industries, it helps to provide raw material.
It provide space/surface for setting up the sites for industrial infrastructure.
In Agriculture, land is considered as the main factor of production as crops are produced on land.
All sources of power i.e. hydro electricity, thermal power, diesel, coal, oil, etc. emanate from land.
Fundamentally speaking, ‘land’ is the original source of all material wealth and it is of immense rise to mankind. In spite of being a passive factor, it is an important factor of production. An overall economic prosperity of a country is directly related to the richness of its natural resources.
