The resources required to produce economic goods. They are land (including all natural resources), labour (including all human work and skill), capital (including all money, assets, machinery, raw materials, etc.), and entrepreneurial ability (including organizational and management skills, inventiveness, and the willingness to take risks). For each of these factors there is a price, i.e. rent for land, wages for labour, interest for capital, and profit for the entrepreneur. Desmet and Fafchamps (2005) J. Econ. Geog. 5, 3 state that perfect mobility of capital and labour tends to bring about an even distribution of economic activity across space, since the use of land leads to decreasing returns to the mobile factors of production—but Puga (2002) J. Econ. Geog. 2, 4 disagrees. Jiménez (2003) Growth & Change 34, 2 observes that public capital is believed to increase the productivity of the private factors of production whereas human capital is thought to contribute to the production process as an additional input. Ettinger (2008) PHG 32, 1 refers to intangible factors of production such as trust, cooperation, and the sharing of knowledge.

Maskell and Malmberg (1999) Eur. Urb. Reg. Studs 6, 1 point out that, historically, while some factors of production were ubiquitous, the cost of certain others varied between locations. They go on to discuss the process whereby some previously important locational factors are actively converted into ubiquities, which they label, with apologies, ‘ubiquitification’: ‘ubiquitification tends to undermine the competitiveness of firms in the high-cost areas of the world. When international markets are opened up and when knowledge of the latest production technologies and organizational designs become globally available, firms in low-cost areas become more competitive.’ Usher (2003) Canad. Geogr./Géog. canad. 47, 4 shows how an aboriginal household allocates the factors of production to optimize income flows from both the market and subsistence economies.