Below are the factors determining national income estimation:
1. Quality and Quantity of Factors of Production: The quality and quantity of land, the climate, the rainfall, etc., regulate the magnitude and excellence of agricultural production. This defines the size of national income. The amount of labour has dual influence since labour is both a factor of production as well as the consumer of what is produced.
The excellence of labour is subject to intelligence, training, which in turn determines the volume of industrial productivity. This will have significant effect on output. Similarly, the quantity and quality of entrepreneurial aptitude is also a chief element in the determining national income.
2. State of Technical Know-how: The extent of technical know-how and technology in production determine the capital formation in the country. A country with plentiful resources will be inactive without any determination if the resources are not methodically exploited. Natural resources collective with advanced technology will go a long way in growing the size of national income.
3. Political Stability: The key to growth the national income rests with significant reasons like capital formation, natural resources, technical know-how and political stability.
