Supply side economics - how to shift the PPF | tutor2u Economics

New economics students are probably familiar by now with the Economic Problem, the four Factors of Production, and the PPF, and the concept that in order to increase potential output, you need to find ways of improving or increasing your available factors of production.

So, we can see fairly easily how to increase Labour and Capital, and building a culture of Enterprise, but getting more available Land can be trickier. However, in China's drive to maintain growth, a solution is offered by the 'magic island-maker'.

This is less romantic than it sounds. It is actually adredging ship which cuts material out from the sea bed, suctions it up and moves it to as far as 15km from the ship to pile it up and form new "reclaimed" land.

Controversially, it is currently being used to build artificial islands in the South China Sea in areas where the waters are also claimed by Vietnam, the Philippines, Malaysia, Brunei and Taiwan. In the past, China has not only built new islands but has also put military installations on them. However, as the BBC reports, the objective of China's Belt and Road initiative is to build a global trading network with China at its heart. As part of that, Beijing is developing a number of ports in the Indian Ocean region and the Middle East. The magic island-maker could be used to drill deepwater ports wherever Beijing chooses to send it.

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