Determinants of national income and Factors on which size of national income depends?

National income is that part of the objective income of a community, which can be measurement in term of money, it also include income corned from abroad.

Following are the main factors on which the size if national income depends.

1.                 Availability of natural resources:

Availability of natural resource and its maximum exploitation increase the size of national income. A country having a large reserve of natural resources, in the form of coal, oil, gas etc can easily increases the size of national income and vice versa.

2.                 Stock of factor of production:

It is one of the most important factors which influence the size of national income. The factors of production are land, labour, capital and organization. If these factors are available in larger quantity, then the size of national income increases.

3.                 State of technology:

If advance technology and latest equipment used in the process of production, then more goods can lie produced, which increase the volume or size of national income.

4.                 Means of transport and communication:

The well developed means of transport and communication, facilitate the exchange of goods and services, and so increase the mobility of the factors of production. It also strengthens trade activities in the country, while rise the volume of national income.

5.                 Political stability:

If there is political stability in the country, the production can be sustained. At the highest level and is the size of national income will be large. In case of political condition is not good the production will be adversely affected and so the size of national income will be small.

6.                 Supply of raw material:

If the raw materials are available in large quantity then the size of national income increases and vice versa.

7.                 Technical know-how:

The technical know-how also influences the size of national income. If the people of a country are well-experienced, trained, and export, then the size of national income increase, otherwise decrease.