ECONOMIC RESOURCES

AR-309: ARCHITECTURE AND TOWN PLANNING (B)

By

RAVINDAR KUMAR
Assistant Professor
Department of Architecture and Planning
NED University of Engineering and Technology
Karachi

LECTURE NO. 09
TOPIC: ECONOMIC RESOURCES

Introduction:
The phrase ‘Economic Resources’ means “the natural, human and capital resources that are used to produce goods and services. It is also called factors of production.”[1] In economics, factors of production (or productive inputs) are the resources employed to produce goods and services.[2] They are generally land, labor, and capital; the three groups of resources that are used to make all goods and services.[3]

The definition of economic resources as mentioned above clearly spell out that the theme economic resources is directly related to production of goods and services. In relation to production three questions are very important. What to produce? How to produce? For whom to produce? In addition it is also important to understand that why goods and resources are related to town planning and how land labour and capital are the significant elements of town planning? Whereas; it may need a further explanation regarding economics as well as urban economics so as to understand the details about economic resources, and its significance in Town Planning. Let’s try to answer all these questions in the following:

Natural, Human and Capital resources:
Materials or energy from the environment used for human needs are natural resources.[4] Human resources; is a term with which many organizations describe the combination of traditionally administrative personnel functions with performance, Employee Relations and resource planning.[5] It is the collective capabilities, experiences, potential and commitment of the organization’s board, management team, staff, and volunteers.[6] The objective of human resources is to maximize the return on investment from the organization's human capital and minimize financial risk. Capital resources are the things produced and used to produce other goods and services.[7]

Goods and Services:
In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility. We satisfy our needs and wants by buying goods and services. Goods are items you can see and touch, such as a book, a pen, a folder etc. Services are provided for you by other people, such as; doctor, dentist, haircut and eating out at restaurants.[8] Or in other words, things that are produced by a country's economy examples of goods include food; clothing, machines, and new roads, examples of services include those of doctors, teachers, merchants, tourist agents, construction workers, and government officials.[9]

What is Economics?
Economics is the social science that studies the production, distribution, and consumption of goods and services. Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business and finance but also in crime, education, the family, health, law, politics, religion, social institutions, war, science and research. Microeconomics looks at interactions through individual markets, given scarcity and government regulation. The theory considers aggregates of quantity demanded by buyers and quantity supplied by sellers at each possible price per unit. It weaves these together to describe how the market may reach equilibrium as to price and quantity or respond to market changes over time. This is broadly termed demand-and-supply analysis. In microeconomics, production is the conversion of inputs into outputs. It is an economic process that uses resources to create a commodity that is suitable for exchange. Some economists define production broadly as all economic activity other than consumption. Public finance is the field of economics that deals with budgeting the revenues and expenditures of a public sector entity, usually government.[10] Thus; the field of economics mainly determines every policy that a government makes for development or town planning.

What is Urban Economics?[11]
Urban Economics is broadly the economic study of urban areas. As such, it involves using the tools of economics to analyze urban issues such as crime, education, public transit, housing, and local government finance. More narrowly, it is a branch of microeconomics that studies urban spatial structure and the location of households and firms. Urban economics focuses on these spatial relationships to understand the economic motivations underlying the formation, functioning, and development of cities. Urban economics is rooted in the ‘location theories’ [12] that began the process of spatial economic analysis. Economics is the study of the allocation of scarce resources, and as all economic phenomena take place within a geographical space, urban economics focuses of the allocation of resources across space in relation to urban areas.[13]

Other branches of economics ignore the spatial aspects of decision making but urban economics focuses not only on the location decisions of firms, but also of cities themselves as cities themselves represent centers of economic activity.[14] Many spatial economic topics can be analyzed within either an urban or regional economics framework as some economic phenomena primarily affect localized urban areas while others are felt over much larger regional areas.[15]

Urban economics is divided into six related themes:

• Market forces in the development of cities,
• Land use within cities,
• Urban transportation,
• Urban problems and public policy,
• Housing and public policy, and
• Local government expenditures and taxes.[16]

Market Forces in the Development of Cities
Market forces in the development of cities relates to how the location decision of firms and households causes the development of cities. The nature and behavior of markets depends somewhat on their locations therefore market performance partly depends on geography.[17] If a firm locates in a geographically isolated region, their market performance will be different than a firm located in a concentrated region. The location decisions of both firms and households create cities that differ in size and economic structure. When industries cluster, like in the Silicon Valley in California, they create urban areas with dominant firms and distinct economies. By looking at location decisions of firms and households, the urban economist is able to address why cities develop where they do, why some cities are large and others small, what causes economic growth and decline, and how local governments affect urban growth.[18] Because urban economics is concerned with asking questions about the nature and workings of the economy of a city, models and techniques developed within the field are primarily designed to analyze phenomena that are confined within the limits of a single city.[19]

Land Use within Metropolitan Areas
Looking at land use within metropolitan areas, the urban economist seeks to analyze the spatial organization of activities within cities. In attempts to explain observed patterns of land use, the urban economist examines the intra-city location choices of firms and households. Considering the spatial organization of activities within cities, urban economics addresses questions in terms of what determines the price of land and why those prices vary across space, the economic forces that caused the spread of employment from the central core of cities outward, identifying land-use controls, such as zoning, and interpreting how such controls affect the urban economy.[20]

Economic Policy in Urban Areas
Economic policy is often implemented at the urban level thus economic policy is often tied to urban policy.[21] Urban problems and public policy tie into urban economics as the theme relates urban problems, such as poverty or crime, to economics by seeking to answer questions with economic guidance. For example, does the tendency for the poor to live close to one another make them even poorer?[22]

Urban Transportation and Urban Economics
Urban transportation is a theme of urban economics because it affects land-use patterns as transportation affects the relative accessibility of different sites. Issues that tie urban transportation to urban economics include the deficit that most transit authorities have, and efficiency questions about proposed transportation developments such as light-rail.[23]

Housing and Public Policy
Housing and public policy relate to urban economics as housing is a unique type of commodity. Because housing is immobile, when a household chooses a dwelling, it is also choosing a location. Urban economists analyze the location choices of households in conjunction with the market effects of housing policies.[24]

Government Expenditures and Taxes in Urban Economics
The final theme of local government expenditures and taxes relates to urban economics as it analyzes the efficiency of the fragmented local governments presiding in metropolitan areas.[25]

Conclusion:
Conclusively for any town planning three questions as mentions above are very important. What to produce? How to produce? For whom to produce? The answer to these questions is the key factor to understand the whole dynamics of economic resources in town planning. Because the answer clearly lead us to appropriate use of economic resources.

References:

[1] http://www.google.com.pk/url?sa=X&start=0&oi=define&q=http://www.thinkport.org/cff247fc-95fb-4f15-9d14-3194417d16de.asset&usg=AFQjCNHx7NIsNid6DGbHTVcAulxDdr1e7Q
[2] http://www.britannica.com/EBchecked/topic/477991/theory-of-production
[3] Sullivan Arthur, Steven M. Sheffrin (2003) Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. pp. 4 ISBN 0-13-063085-3 http://www.pearsonschool.com/index.cfm?locator=PSZ3R9&PMDbSiteId=2781&PMDbSolutionId=6724&PMDbCategoryId=&PMDbProgramId=12881&level=4
[4] http://www.google.com.pk/url?sa=X&start=4&oi=define&q=http://www.deq.state.va.us/kids/library/wstmanvo.html&usg=AFQjCNG2lwacryszDZ5-VbwuhKRiJ_VeYQ
[5] http://en.wikipedia.org/wiki/Human_resources
[6] http://www.google.com.pk/url?sa=X&start=5&oi=define&q=http://www.vodium.com/vs_data/dlfbi/definitions.doc&usg=AFQjCNF3x1pNIuJiJ8ZplbqZLRg2uFCbcg
[7] http://www.google.com.pk/url?sa=X&start=2&oi=define&q=http://www.auburn.edu/~owensse/PowerPoint_Definitions.htm&usg=AFQjCNG8tAND3rL3_w-A7VwZOcwxqkBuwA
[8] http://en.wikipedia.org/wiki/Goods_and_services
[9]www.unesco.org/education/tlsf/TLSF/theme_c/mod13/www.worldbank.org/depweb/english/modules/glossary.htm
[10] http://en.wikipedia.org/wiki/Economics
[11] http://en.wikipedia.org/wiki/Urban_economics
[12] Roberta Capello and Peter Nijkamp, Ed (2004) Urban Dynamics and Growth: Advances in Urban Economics. Elsvier Inc.
[13] Richard J. Arnott and Daniel P. McMillan, Ed (2006) ‘A Companion to Urban Economics’ Blackwell Publishing ISBN 1405106298
[14] O'Sullivan, Arthur (2003) ‘Urban Economics’ Boston, Mass: McGraw-Hill/Irwin. ISBN 0-07-248784-4
[15] McCann, Philip (2001) ‘Urban and Regional Economics’ Oxford University Press
[16] O'Sullivan, Arthur (2003) ‘Urban Economics’ Boston, Mass: McGraw-Hill/Irwin. ISBN 0-07-248784-4
[17] McCann, Philip (2001) ‘Urban and Regional Economics’ Oxford University Press
[18] O'Sullivan, Arthur (2003) ‘Urban Economics’ Boston, Mass: McGraw-Hill/Irwin. ISBN 0-07-248784-4
[19] McCann, Philip (2001) ‘Urban and Regional Economics’ Oxford University Press
[20] O'Sullivan, Arthur (2003) ‘Urban Economics’ Boston, Mass: McGraw-Hill/Irwin. ISBN 0-07-248784-4
[21] McCann, Philip (2001) ‘Urban and Regional Economics’ Oxford University Press
[22] O'Sullivan, Arthur (2003) ‘Urban Economics’ Boston, Mass: McGraw-Hill/Irwin. ISBN 0-07-248784-4
[23] Ibid
[24] Ibid
[25] Ibid