A resource market allows parties to exchange goods or services to produce products. The most common markets include those that exchange natural resources, labor, financial services, or capital. A review of these markets typically falls under macroeconomics. Nations will review the information gleaned from each resource market to determine the current strength of the economy. The data gleaned also helps businesses make decisions that will lead to higher production output and the ability to meet current demand for products.
Each resource market plays a role in the circular flow of economic transactions. The resource market allows businesses to produce goods that enter the product market. Households then use the final products as part of their standard of living. The resource market is then refilled by individuals who place money into savings accounts at banks and individuals looking for jobs. This provides a flow of goods through a nation’s economy and multiple markets.
Defining each resource market by the goods in them allows for the ability to accurately track the flow of goods. Natural resources include land, timber, fisheries, quarries, and similar items. Not all companies use these goods for production. Manufacturers harvest these resources and transform them into intermediate goods used by other firms. For example, a lumber manufacturer will harvest timber, making the wood pieces used by construction companies.
Labor markets are a sources of use by almost all companies. Two groups are in this resource market: skilled and unskilled. Skilled laborers represent individuals with specific skills that companies will pay high prices to procure. Accountants, engineers, actuaries, and computer technicians are a few examples of skilled labor. Unskilled labor includes individuals with few technical skills; these individual often work at jobs with repetitive tasks.
Financial services and capital resource markets include all companies that work with money. These include banks, investment firms, and lenders. Companies often need the services of these firms in order to produce goods and services. The use of outside capital allows a firm to increase its business operations quicker than waiting for operational profits. Growth allows for the increase in production and ability to meet more consumer demand.
The increasing use of global resource markets allows firms to use resources from international firms. This can lower operating costs by procuring cheaper intermediate goods or labor. Though this can result in higher profits, detractors to these markets include lower product quality and the possibility of losing customers who do not prefer outsourced products.