The allocation of resources is the process that consists in distributing the resources available at a given time, among the different alternatives or uses.
The various economies of the world have to distribute or assign productive factors ; capital, labor and land, efficiently among the different alternatives, in order to obtain positive results.
We know that the resources that can be counted at a given time are practically limited, while the needs to be covered with them are clearly unlimited. Distributing between different alternatives efficiently the productive factors is not easy. Therefore, the issue of resource allocation is a titanic task.
Key aspects of the resource allocation process
In the process of assigning or applying human resources, material resources, financial resources and technical resources it will never be an easy task to carry out, interested, erroneous decisions can be made according to personal and social values, vain or simple, etc., being its terrible consequences for any company, society, country, or family.
Therefore, the task of this process requires planning, statistics management, experiences, deep studies and calculations. The choice of people for such a task is key or fundamental in any circumstance.
Allocation of public or private resources
The resource allocation process encompasses certain means that make its management possible. In economies called market economies , the price system is present. As the price mechanism serves as a guide for economic activities, this is provided as a means to allocate resources in the different economies based on the free market.
In other economies, such as the socialist economy , in which the absence of the price mechanism prevails, the allocation of resources is carried out or rather, is carried out through planning agencies.