How the factors connect

The factors are combined to produce goods and services, but the proportions (the mix) differ hugely from product to product.

Farming, construction and handicrafts rely more on labour, so they are called labour-intensive. Semiconductor chips and satellites need far more capital and specialised machinery, so they are capital-intensive.

The factors complement each other and are interconnected. If one factor is missing or misused, production can become inefficient, or stop altogether.

But the mix can change. More machines in farming reduce the need for labour. And 3-D printing can help revive dying art forms in textiles, making handloom-style products at a scale the market can take.

There is also a geographic side. Inputs are found in different places, and enterprises buy them from many locations and combine them, which gives access to a wider range of inputs.

That access comes with a risk, though. A supply chain is the network of people, organisations, resources, activities and technology involved in making and selling goods.

When a supply chain breaks, because inputs come from far away rather than locally, production stops, as happened during the COVID-19 pandemic.

The chapter's worked example is mobile phones, where India was the world's second-largest maker after China in 2025. The stages:

• research and development plans the features;
• land is bought and a factory set up;
• raw materials are bought;
• parts are assembled and software installed;
• the phone is tested;
• then mass production, packaging and distribution.

Human effort runs through every stage.