In ordinary language volume of production means creation of goods like tables, books etc. In Economics production means the creation of economic utilities. It is known fact that individuals can’t create any matter or commodities. They can only create utility through changing the place or time of the materials. They insert utility and value into the materials. Materials available in nature by themselves are not useful unless their form or place is changed. For example, a carpenter creates utility to a log by changing it into a table, chair or furniture.
In this connection it maybe noted that production does not mean mere creation of utility or matter. Utility in the absence of value is useless in sense. Hence production implies creation of both utility and value of the goods out of the matter. Economic development of a country depends on the volume of production. The higher the volume of manufacturing or production, the greater will be the development of a country . Hence, volume of production and the future of a country closely related to one another.Several factors as explained below determine the volume Of Production in an economy.
Factors That Determine The Volume Of Production:
1. Availability of Natural Resources: The volume production depends on the quantity and quality of the natural resources available in a country. If a country has large Deposits of natural resources like fertile soil, perennial rivers, extensive forests, long sea coasts, rich minerals etc, volume of production will be high. The larger the availability of resources, the larger will be the volume.
2. Availability of capital: Capital is an important factor in determining the volume of production. Capital includes both fixed capital and variable capital like machinery, buildings. raw materials, electricity etc. The capital depends on the level of savings and investment and banking facilities.
3. Technology: Technology is another determinant of the volume of production. If the people possess technical knowledge, education and training, they can produce diverse goods. They can make inventions and adopt latest technology for producing goods and services. Besides, they also increase the quantity and quality of goods. Hence the nature of technology influences the volume of manufacturing or production.
4. Factors of production: Another determinant of Volume of manufacturing or production is the factors of production. Factors of production comprise labor, capital and organization. The quantity and quality will influence the volume of production. If these are plenty, then production of goods on large scale is possible.
5. Transport facilities: Transport facilities also determine the volume of production. Better transport and communications enable the free movement and distribution of goods within a country. They also create adequate demand for the raw materials
6. Methods of organization: The volume of manufacturing or production is determined by the methods organization. Old and outdated methods reduce the volume manufacturing or production. Introduction of rationalization and modernization will increase the volume of production. Introduction of division of labor in production process also increases the quantity and quality of production.
7. Political conditions : Political conditions of a country also influence the volume of manufacturing or production. If there exists political instability, Production will not increase. As against this, if there exists political stability, production will be organized on large scale.
8. Climate : The conditions of climate also influence the volume of production. If there exists a favorable climate and adequate rainfall, then production will increase and vice-versa.
9. Efficiency the people : The volume also depends on the efficiency of the people. If efficiency of the people is higher, production will be high and vice-versa.
10. Economic policy of the government : The volume of production is also determined by the economic policy of the government. The government should provide initiative and incentive for young and dynamic entrepreneurs for starting and managing new firms. Then only volume of manufacturing or production will increase.
Thus, the above factors factors determine the volume of production in a country.