Capital

In economics, capital basically refers to the stock of goods used in the production of other goods. Capital is considered as a factor of production in classical economists, who also distinguish between financial capital and physical capital. While financial capital is accumulated or inherited wealth held in the form of assets, such as stocks and shares, property, and bank deposits, physical capital is wealth in the form of physical assets such as machinery and plant. The term is also used to describe investment in a company as either share capital or debt (called loan capital).Fixed capital is durable, such as factories, offices, plant, and machinery. Private capital is usually owned by individuals and private business organizations. Social capital is typically owned by the state and is the infrastructure of the economy, like roads, bridges, schools, and hospitals. Human capital is what enables people to earn a living, and may be enhanced by better education, training, and health care. Investment is the process of adding to the capital stock of a nation or business. The pattern of world development could be interpreted as a clear demonstration of the possibilities for convergence. By successfully mobilizing and allocating resources efficiently and improving their human and physical capital to assimilate and adapt appropriate technology, the countries of resurgent Asia achieved significant catch–up on the advanced capitalist group. Capital is a highly relevant factor of production in international economics as it affects international trade flows. Globalization encompasses several phenomena and trends which have led to a growing interdependence of most economies throughout the world. It displays its effects through a strong increase in cross-border transactions in goods and services, capital, labor and natural resources. Globalization has allowed many emerging countries to enter and compete in world markets. Although labor mobility is still limited worldwide, the increased flexibility of capital flows means that firms now have much easier access to global labor supply than before.