Patterns & Consequences of Natural, Human & Capital Resource Use

Instructor: David Juliao

David has a bachelor's degree in architecture, has done research in architecture, arts and design and has worked in the field for several years.

In this lesson, learn about the natural, human and capital resources that are used throughout the world. Explore some patterns of use of these resources and how they affect the development of a country's economy as well as the consequences that occur.

The Tripod of Economic Activities

Why do many agricultural activities take place in the Mid-West? Why are so many manufacturing industries in China? For starters, economic activities that develop in a certain place often depend on the availability and use of resources. These resources include natural resources, human resources and capital resources. Let's take a closer look at each.

Economic activities require natural (soil), human (operator) and capital (machinery) resources

Natural Resources

Natural resources are elements and materials that have formed without any human action. They exist in nature, and people might take them and use them in their natural form or as raw materials for producing all types of objects. These resources can be renewable, like water, sunlight, wind and trees, or non-renewable, like fossil fuels, gold, iron, clay and other minerals.

So how do these natural resources influence land use? Well, the proximity of natural resources to a certain civilization creates patterns of land use. For example, intensive agriculture has developed in the Mid-West because this region has very fertile soil. Also, Saudi Arabia has specialized in oil extraction because they have easy access to large oil reserves.

Copper mine in Chile. Countries like Chile specialize in extracting natural resources
Copper mine

Now how do these resources affect the economy? Natural resources are abundant in many countries like Africa and Latin America, but are not as prevalent in places like Europe or Japan, where they are often demanded. Therefore, some developing countries have specialized in mining, and their economy is largely based on the natural resources they export. But because they lack manufacturing industries, they must import finished goods like cars and cellphones.

Most industrialized nations, on the other hand, have industrial and service-based economies and can afford to import the natural resources they need. The United States is an example of an industrialized country that also has abundant natural resources, and this allows for a very diverse economy.

Let's find out about another important resource.

Human Resources

Human resources refer to the human effort needed for the production of goods and services, and societies and economies need human resources to advance. These resources often include skilled and unskilled labor. Entrepreneurial and management skills are also human resources and refer to the ability to start and run economic activities.

So how do human resources impact a country's economy? Human resources affect development and the emergence of economic activities, like the technology industry. Most of technology industries are in developed countries with highly specialized human resources. However, because labor costs in these countries, like Europe, Japan and North America, are high, many goods are manufactured elsewhere to be affordable. In the 1980s and 90s, low wages in places like India and China attracted industrial activities and caused these countries to become large manufacturers of all types of goods, making the economies grow quickly. However, the low salaries caused exploitation and poverty levels to remain high.

Many industrial activities take place in China because labor costs are low

Let's look at the last type of resource.

Capital Resources

Capital resources are valuable goods needed for economic activities to start and function. Among the capital resources are money for investments; infrastructure like electricity, roads and schools; and access to technology (tools, machinery) that allows businesses to be more productive and profitable.

Since the Industrial Revolution, most capital resources have been in Europe and North America. Companies from these nations have then invested part of this capital in the developing countries, mostly establishing facilities for extracting natural resources. This has happened with oil industries in the Middle East and diamond mines in South Africa.

In some Asian nations, capital has been invested in manufacturing activities. Some nations became newly-industrialized countries and large exporters of manufactured goods. China is a great example. China has accumulated capital resources, and in the last two decades, has been investing in many countries worldwide.

China continues to attract investments and has also become an investor in other countries

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