1. What is capital?

In economics, capital consists of anything that can enhance a person's power to perform
economically useful work. Capital goods, real capital, or capital assets are already-
produced, durable goods or any non-financial asset that is used in production of goods or services.

2. What is capital in poor countries?

Capital is scarcest and labor most abundant in the world’s poorest countries, yet they receive no
private bank lending or portfolio investment. Although they do attract FDI, Foreign direct
investment (FDI) is an investment made by a company or individual in one country in business
interests in another country, in the form of either establishing business operations or acquiring
business assets in the other country, such as ownership or controlling interest in a foreign
company. it is only at a rate similar to richer countries. Moreover, though many poor countries run
trade deficits, official aid and migrant remittances provide the financing that makes these possible,
not private capital inflows.

Ang kapital ay pinakamadali at labis na nagtatrabaho sa mga pinakamahihirap na bansa sa

mundo, gayon pa man ay hindi sila tumatanggap ng pribadong lending ng bangko o portfolio
investment. Kahit na nakakaakit sila ng FDI, ang Foreign Direct Investment (FDI) ay isang
pamumuhunan na ginawa ng isang kumpanya o indibidwal sa isang bansa sa mga interes ng
negosyo sa ibang bansa, sa anyo ng alinman sa pagtatatag ng mga pagpapatakbo ng negosyo o
pagkuha ng mga asset ng negosyo sa ibang bansa, tulad ng pagmamay-ari o pagkontrol ng interes
sa isang dayuhang kumpanya. ito ay lamang sa isang rate na katulad ng richer bansa. Bukod pa
rito, kahit na maraming mga mahihirap na bansa ang nagpapatakbo ng mga depisit sa kalakalan,
ang opisyal na tulong at migranteng remittances ay nagbibigay ng financing na gumagawa ng mga
posibleng ito, hindi ang mga pribadong pagpasok ng capital.

3. What is capital in rich countries?

Most people (and certainly economists) will find this surprising, because one would assume
that rich people save more than poor people, particularly those whose incomes are barely at
subsistence levels. But that is not so. From 2000 to 2007, high-income countries saved an
average of 20 percent of GDP, while middle- and low-income countries saved 28 percent of
GDP. For some large developing countries, mainly those in Asia, savings rates were even
higher. These high savings rates imply that, in any given year, developing countries have
more capital available for domestic investment relative to the size of their economies than do
developed economies. In China, an extreme example, gross savings averaged 45 percent of
GDP from 2000 to 2007. Therefore, for China to be a net importer of capital, investment
would have had to exceed 45 percent of GDP—an extraordinarily high level, even for a rapidly
growing country— during the same period. Conversely, the United States saved an average of
only 14 percent of GDP during the same period, while investing 20 percent.

Karamihan sa mga tao (at tiyak na mga ekonomista) ay makakakita ng kagulat-gulat na ito,
sapagkat ang isa ay mag-aakala na ang mga taong mayaman ay nagligtas ng higit sa mga
mahihirap na tao, lalo na yaong ang mga kita ay halos sa mga antas ng pag-iral. Ngunit hindi
ganoon. Mula 2000 hanggang 2007, ang mga bansa na may mataas na kita ay naka-save ng isang
average ng 20 porsiyento ng GDP, habang ang mga bansa sa gitna at mababang-kita ay nag-save
ng 28 porsiyento ng GDP. Para sa ilang mga malalaking pagbubuo ng bansa, pangunahin sa Asia,
ang mga rate ng savings ay mas mataas pa. Ang mga mataas na mga rate ng pagtitipid ay
nagpapahiwatig na, sa anumang partikular na taon, ang mga umuunlad na bansa ay may higit na
kapital na magagamit para sa lokal na pamumuhunan kaugnay sa laki ng kanilang mga ekonomiya
kaysa sa mga ekonomyang binuo. Sa China, isang matinding halimbawa, ang kabuuang savings ay
may average na 45 porsiyento ng GDP mula 2000 hanggang 2007. Samakatuwid, para sa China na
maging net importer ng kapital, ang investment ay kailangang lumampas sa 45 porsiyento ng GDP-
isang sobrang mataas na antas, kahit para sa isang mabilis na lumalagong bansa-sa parehong
panahon. Sa kabaligtaran, ang Estados Unidos ay naka-save ng isang average ng 14 porsiyento
lamang ng GDP sa parehong panahon, habang namumuhunan sa 20 porsiyento.

Political conditions are the process of making decisions that apply to members of a group. It refers
to achieving and exercising positions of governance — organized control over a human community,
particularly a state. Furthermore, politics is the study or practice of the distribution of power and
resources within a given community (this is usually a hierarchically organized population) as well
as the interrelationship(s) between communities.

The main criteria which are applied in a specific situation and to the behavior of other countries are
failure to make efforts to achieve good governance, e.g. the deliberate and consistent blocking of
reform-oriented measures; serious violations of human rights, in particular grave discrimination of
minorities; the interruption or revoking of democratization processes; serious infringements against
peace and security (war, warmongering, state terror); reluctance to accept the right of return of
nationals (refugees).

Political Factors and Development

How a country operates can have a dramatic impact on the development within a country. The
government-enforced policies and administrative norms known as political factors can
influence economic development, which is the process that increases standard of living by moving
away from traditional farming cultures to industrialized societies.
In general, political factors influence economic development by supporting or disrupting the process
of development.

The Role of Political Factors

Regime type is the form of government within a country. This includes whether a country is
democratic, authoritarian, communist, or other. The regime type influences the policies that affect
personal and public economic development. For example, in a democratic nation, people are able to
obtain small business loans and start their own company. The business is able to expand
exponentially and pay employees different rates depending on the work they are doing. However, in
a communist nation, there are strict regulations such as paying all staff equally, which can impact
how businesses operate and prevent growth that would increase economic development.

Political stability, or instability, refers to the reliability and durability of a government's

structures. The more stable a political system is, the less risk a business operating in that country
will face. Nations where there is a high risk of terrorism or internal conflicts are less stable. This
makes opening and operating a business expensive and risky in the region. When a country goes to
war, this decreases business and it can harm the quality of the currency exchange rate, or the
amount the country's money is worth when compared to that of other nations. Thus, less stable
systems are less likely to see an increase in economic development because they are risky to
operate in.
Political management refers to how well the government monitors and enforces national and
international policies or laws. Countries where copyright and piracy laws are not enforced are less
desirable for businesses to operate in. Failure to enforce copyright or piracy laws means that a
company may not make money and, in turn, this increases the risk of operating in the region. For
example, a company that wants to sell music may change their mind because this won't be
profitable. Everyone will illegally download the music for free.

Level of corruption identifies the level of dishonest, unethical, and illegal practices that are
imposed on people and businesses operating in a region. Corruption can include bribing
politicians, bribing local companies for materials, or paying to prevent competitors from entering
the market.

Most of the African countries refer to themselves as democratic and have leaders who are elected by
the majority of the citizens. The characterization of democracy in Africa is multi party regimes
where a country has more than one party that seeks for votes at the various levels.

The majority of the countries have presidential form of government and the presidents are the
‘defacto’ rulers of the countries. Elections are held every five years in most places and in many
cases a president is only to have a maximum of two terms with some exceptions where the
president have been ruling for an elaborate period of time.

This is the case for instance in Uganda and in Zimbabwe. Voting is seen as the basic way that
Africans will be able to determine the nature of their government and this has resulted to huge
voter turnout in most places in Africa with the average being over 66% which is much higher than
in most developed countries including USA in the 2016 presidential vote which had a voter turnout
of 55.4%. For instance the turnout in Africa has been a high of 78.28% in Sierra Leone in 2012 and
a low of 38.6% in Liberia in 2011.

Despite a large percentage of countries being democratic, elections in Africa have been
characterized by voter buying by the political leaders although this situation is fast changing. The
maturity of the elections in Africa is becoming more evident as the interest on issue based politics
as opposed to partisan politics becomes more pronounced. For example, the introduction of
presidential debates like what was seen in Kenya in the last general elections and the attempt to
introduce electronic voting in a number of countries to promote transparency and accountability.

Namibia in 2014 was the first African country to use an electronic voting system. In the media,
Africa is portrayed as the hotbed of conflict especially with the highlights in Central African
Republic and in South Sudan. This is however not a representation of the situation in Africa as civil
conflict in Africa is on the decline in the last five years. Generalization of the African situation by
the main stream media has led to this conclusion although this is not always the case.

Although traditionally in Africa leadership positions were for men and this situation is changing
drastically especially with civilization and more so began to change after the women declaration in
Beijing. There is deliberate effort to promote equality and this has borne fruits with two African
countries Liberia and Malawi having women presidents.

Africa is leading the rest of the world on the gender equality especially in politics. In Rwanda, for
instance women hold 64% of the country’s parliamentary seats. While other countries Namibia, and
South Africa women account for more than 40% of parliamentary seats. Mozambique, Angola,
Ethiopia, Burundi, Algeria, Tunisia, Cameroon and Uganda are closely following with over 30% of
seats being occupied by women. By contrast, in the US women hold on average 20% of the political
leadership both in the house as well as the senate. Gender mainstreaming is something Africa can
now teach the rest of the world.

The challenge with the Africa continent has always been after the election and whether the
manifestos of the leaders that are elected are actually implemented. For instance, a typical scenario
in Africa is that the newly elected leader will launch an ambitious manifesto, normally before the
election as a campaigning tool. Such master plans will include ambitious reforms that should help
in creating jobs, revival of agriculture or any other major sector in the economy, reduce corruption
in government and the guarantee of equal treatment of all citizens despite whom they voted. Once
the elected leader is in place, he will normally forget about the master plan mainly due to the
powerful forces who are defying the change mainly because they benefit from status quo and
continued patrimonialism. They will frustrate the elected leader who due to frustration will only be
able to achieve less of his manifesto. This is an area where the continent can learn a lot from the
developed countries on how to put to task the leaders who do not meet their promises. This should
be done on a real time basis as opposed to waiting for four to five years when the next election will
be held.

Since the day Singapore officially gaining sovereignty on 9 August 1965, its politics has been
dominated by the People’s Action Party (PAP). During the 2006 election the PAP won 82 out of 84
seats in the nation’s Parliament. Despite the PAP’s dealings with communists in the early days, its
governing philosophy for the last several decades can best be described as Socialist Democracy.

Singapore, under the leadership of the PAP, possesses a distinct political culture: authoritarian,
pragmatic, rational and legalistic. Singapore’s power structure is highly centralized, characterized
by a top-down style. It features appointment rather than election to most offices. Economic growth
and political stability were maintained by the paternal guidance of the PAP. Thus, Singapore is not
administered by politicians, but by bureaucrats, in a meritocracy where power is gained through
skill, performance, and loyalty to the nation and its policies.

Furthermore, Singapore has a multi-racial and multi-religious character, where giving fair
treatment to all races in education, housing and health is considered very important. The
minorities are assured of equal representation in Parliament through the Group Representation
Constituency or GRC system.There is a dominance of government-controlled companies in the local
economy. But in spite of its powerful position, the Singapore government has maintained a clean,
corruption-free image. In addition, rifts within the leadership in Singapore are rare. The mode of
decision making is by consensus, and the leadership style is collective.

The formal Head of State of the Republic of Singapore is the President. Tony Tan Keng Yam is the
current President and he was sworn in on 1 September 2011. The Prime Minister and Head of
Government is Lee Hsien Loong, who was sworn in on 12 August 2004.