Capital Formation and Poverty Reduction
Introduction
Human civilizations have used and transformed natural
resources for millennia. For example, the Romans used gold to create art and
architecture. They also used stone to build structures such as temples and
bridges. The natural resources humans use to create capital are called
non-human resources. By understanding which natural resources contribute to a
country’s economic growth, we can examine how these resources impact economic
growth and poverty reduction.
Capital formation contributes to economic growth.
Essentially, this process involves transforming natural resources into goods
and services the country can use to satisfy its needs. In the early days of
capitalism, labor was the first form of capital to be created. As business
owners obtained more power, new economic ventures required more capital. These
ventures included factories producing goods for trade with other countries as
well as financing through bonds and stock investments. Today, the world has
transformed natural resources into goods and services for people to use.
However, when some resources are extracted from the earth or manufactured
naturally, they can cause poverty among the majority of the population.
There are several ways to measure a country’s ability to
create capital. % GDP from non-human resources is one metric that indicates a
country’s level of development. A country with a high level of development uses
less non-human resources than one with low development. For example, China uses
more non-human resources than Chad according to a study in the journal
Resources Policy. Non-human resources can also be measured monetarily as a
country’s gross domestic product (GDP). If all non-human resource costs were
monetized and subtracted from a country’s GDP, this would indicate a country’s level
of development related to creating capital.
One way we can understand a country’s level of development
when creating capital is by examining how effectively it uses its existing
capital. According to the World Bank, South Korea invested 22% of its GDP in
1995— an impressive figure compared with 5% for Sierra Leone in 2004. In the
past 20 years, both countries saw improvements in their economic status due to
their ability to create capital effectively. The way countries use their
capital affects economic growth by increasing or decreasing economic activities
needed for economic growth. In addition, governments may subsidize industries
using less capital; this reduces the cost of production and encourages
businesses to invest more in their operations.
The world is changing rapidly as new natural resources are
being monetized every day. Using these resources creates new opportunities for
people and contributes to economic growth by creating new goods and services
for people to consume. However, not all resources contribute equally towards
economic growth due to their effect on poverty levels— a country’s level of
development and how effectively it uses natural resources affect which natural
resources contribute toward economic growth. Ultimately, we need to consider
all factors when making decisions about our world!
Causes of poverty
Poverty is a word that describes a condition of deprivation
or lack of resources in the developing world. Poverty is a dire social ill, and
it has negative effects on people’s mental, physical, spiritual, and
socio-economic well-being. Generally speaking, poverty is a vicious cycle— it’s
a cycle that entraps the poor in an endless cycle of poverty.
A poor family’s financial situation is usually linked to the
number of family members. The more family members there are, the more difficult
it is to escape poverty. For example, if there are five members of a poor
family, it’s difficult for them to earn enough money to break free from
poverty. In addition, poor families tend to have fewer children than rich
families. This is because they have trouble providing for all their family
members, so they must reduce their family size slightly. However, this doesn’t
mean that poor families can never escape poverty; they just have to work hard
to do so.
It’s also important to understand how poor habits affect a
family’s financial situation. Many poor families are stuck in debt because they
buy cheap goods with their meager earnings. These goods are low quality and not
worth the money they cost. Furthermore, poor families don’t know any other way
to make money than by selling low-quality goods. This makes it even harder for
them to escape poverty; they’re stuck in a vicious cycle of poverty with no way
out.
The last part of breaking out of poverty is having someone who
can provide moral support for the family. A moral support system helps the
entire family stay on track with their financial goals and prevents them from
falling back into poverty. For example, if there’s a parent living at home who
can provide moral support for the family this greatly improves their financial
situation. Having a moral support system also helps with good habits— many poor
families don’t have time to exercise and eat healthily, so having a moral
support system helps them with both of these tasks.
Breaking out of poverty is difficult, but it’s possible if
the right steps are taken. A poor family needs enough money to live on without
supplementing their income with illegal activities. They also need good habits
such as regular savings and proper nutrition to improve their financial
situation. In addition, they need someone who can provide moral support for
their family— this indirectly improves their financial situation by helping
them stay on track with good habits and preventing them from falling back into
poverty.
Solution of Poverty Reduction
