Economic Development: Theory and Policy Applications

By Fidelis Ezeala-Harrison | Go to book overview

7
Capital Accumulation and the Process
of Development

This chapter deals with the role of capital formation in the development process. This role, together with its accompanying requirements of technological skill and know-how, cannot be overemphasized. Although both physical capital and financial capital are implied, financial capital is deemed to be just a means to acquiring physical capital. Financial capital is based on the savings decisions that finance physical capital, which involves the actual real investment decisions. In the LDCs, savings and investment decisions are often combined because of the low level of development of financial markets and institutions. Therefore, it may not be necessary always to draw the line between physical capital and financial capital.

Capital has always been recognized as the single most critical factor determining a nation's ability to develop. In fact, it is regarded as the prime mover of the development process. It is made of the various forms of investment in the development of land and natural resources, construction of residential and industrial buildings, physical plants and equipment, raw materials, and human capital. Human capital is the acquisition of knowledge, skill, and technological know-how through investment in human resources. 1

Within the internal aspects of a country's development circumstances, capital formation, entrepreneurial ability, and technological know-how together constitute the most essential requirements in generating and sustaining growth. In an LDC, capital accumulation would enable the economy to break, and indeed reverse, the vicious circle of poverty that tends to constrain the ability to initiate growth. More capital would increase the capital-labor ratio, enabling productivity to increase, leading to higher incomes, higher savings ability, and higher investment and capital accumulation for further growth.

Higher capital formation would enable the economy to be capable of making higher capital consumption allowance, and to facilitate more effective utilization of capital stock, resulting in higher productivity. This is especially essential in the creation and maintenance of the infrastructural base of the economy,

-129-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Economic Development: Theory and Policy Applications
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 284

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.