I have never studied Economics academically and always felt it was my impediment as an investor. Now that my kids are taking the subject in school, I got hold of their textbooks and took this opportunity to learn with them. Yes, learning never stops.
In the first lesson in Economics, we are taught that there are four factors of production that is needed to produce finished goods and services. These are the building blocks that form the basis of any economy. Originally, there was only three, but over time, as knowledge increases, the fourth factor was added.
1. Labour: this refers to people, workers and manpower that make things and create services. People are also consumers and as such the largest economies tend to also have the largest populations.
2. Capital: this actually refers to financial and working capital (ie money in layman's term), fixed capital (equipment, servers, buildings) and also other forms of capital such as R&D and intellectual property.
3. Land: this is raw land and also the resources like copper, oil and gold under the land. This also includes forests for timber and water reservoirs.
4. Entrepreneurship: this is human innovation and the ability to harness the top three factors and ingenuity to generate economic growth.
In the early days leading to the independence of Singapore, economic theory postulated that we could never have created any kind of economy since we have limited capital, labour and entrepreneurship. The biggest problem was that we didn't have land. We didn't even have enough water. Our forefathers really reinvented themselves to lay the foundations of the country and the abundance we have today.
But it's fortunate we started in the 20th century and it became possible to create an economy and relying a lot on entrepreneurship and innovation.