In a mixed economy like Ireland, economic resources are scarce, so individuals, organisations and the government work together to distribute the resources used to produce goods and services. Exam questions ask you to explain how each of these three groups supplies resources to produce goods and services.
Economic Resources and Economic Systems
Economic resources are the inputs needed to make goods and supply services. How these resources are shared depends on the country's economic system.
| Resource Type | Description | Irish Example |
|---|---|---|
| Human resources | Labour, skills, and management | Teachers, factory workers, software developers |
| Land | Natural resources and physical space | Farmland in Munster, wind energy, building sites |
| Capital goods | Man-made equipment used in production | Delivery vans, factory machinery, ovens |
| Financial resources | Money used to fund economic activities | Commercial bank loans, savings, state grant aid |
| Technology | Digital tools and communication systems | Broadband networks, payment apps, inventory software |
A bakery oven is a capital good, while the loan or savings used to buy it is a financial resource.
- Free market economy: prices are set by supply and demand, nearly all goods and services are provided by private businesses, and the government has little or no involvement.
- Mixed economy: Ireland's system, where private businesses and the government both provide goods and services, so resources are shared between the private sector and the state.
The Role of Individuals
Individuals contribute essential resources and influence what gets produced through their daily choices.
- Supplying labour: workers supply their time, effort and skills in exchange for wages and salaries.
- Paying taxes: citizens pay income tax (PAYE) and VAT on purchases, providing the state with funding for public services.
- Supplying land: property owners rent or sell land to private firms for commercial sites or to local councils for housing and schools.
- Starting enterprises: entrepreneurs invest their own savings and take risks to set up new businesses.
- Consumer spending: when people spend, firms earn the revenue they need to buy equipment and hire workers.
The Role of Organisations
Organisations bring land, labour and capital together to deliver goods and services. They operate in two distinct sectors:
- For-profit businesses: commercial enterprises, from local bakeries to multinational tech firms, invest funds into capital goods and technology. They aim to earn a profit for their owners, provide private-sector employment, and pay corporation tax to the government.
- Not-for-profit organisations: charities, voluntary groups and sporting bodies (such as St Vincent de Paul or local GAA clubs) step in where commercial businesses cannot operate profitably. They direct donations, membership fees and volunteer hours toward community needs. Any financial surplus is reinvested directly into their social goals rather than distributed to owners.
The Role of Government and Interdependence
The government uses tax revenue to provide services and resources that private businesses may not supply.
- Direct employment: the state directly employs public servants, including teachers, nurses and gardaí.
- Funding infrastructure: tax revenues fund vital public assets such as motorways, hospitals and broadband networks.
- Enterprise support: Local Enterprise Offices (LEOs) give grants and mentoring to very small local businesses, while Enterprise Ireland supports Irish firms aiming to grow and export.
- State and semi-state body providers: the state owns organisations that supply goods and services directly, such as the ESB (electricity), An Post (postal services) and Iarnród Éireann (rail).
No single group owns all resources, so all three are interdependent. For example, to build a new school, the government provides tax funding and planning approval, private construction firms supply machinery and building materials, and local voluntary boards manage community events within the completed facility.
Key terms
- Economic resources
- The inputs used in producing goods and services, including human resources, land, capital goods, financial resources, and technology.
- Goods and services
- Goods are physical items you can touch, such as bread or a van; services are work done for you, such as teaching or a bus journey.
- Mixed economy
- An economic system where private enterprise and the government both share in providing goods and services.
- Free market economy
- An economic system where prices are set by supply and demand, with private provision and minimal government involvement.
- Capital goods
- Man-made physical assets such as machinery, tools, and vehicles used to produce other goods and services.
- Financial resources
- The money, loans, savings, and grants available to fund operations and purchase equipment.
- For-profit organisation
- A business established with the primary aim of earning a financial profit for its owners or shareholders.
- Not-for-profit organisation
- An organisation set up to achieve a social or community purpose that reinvests any surplus funds directly into its work.
Check yourself
What is the key difference between a free market economy and a mixed economy?
In a free market, private businesses provide almost all goods and services with minimal state role; in a mixed economy, the state and private businesses both provide them.
State two ways individual citizens contribute to resource distribution.
They supply labour in return for wages and pay taxes (such as PAYE and VAT) that fund public services.
Name one semi-state body that supplies a service in Ireland.
The ESB (electricity), An Post (postal services), or Iarnród Éireann (rail services).
How do not-for-profit organisations use any financial surplus they generate?
They reinvest the surplus directly back into their social or community purpose instead of paying dividends to owners.