Thread by @AtifRMian

One broad misconception about growth or development is that growth *requires* capital

That is not accurate: to first approximation, growth *creates* capital

some explanation ...

The most important ingredient, or requirement, for growth is productivity.

If productivity rises, firms and individual create a larger surplus that they can then deploy as capital, or investment, for even greater output.

This is the bottom line to keep in mind

Now, you might ask, but doesn't one need capital for boosting productivity?

Not really

Almost always, the constraints societies face have to do with organization, management, trust, rule of law, experimentation, institutions, innovation etc.

As an example, let's take a sector that is relevant for every country in the world, agriculture

Consider a country that is currently producing 50 cents per inch of land when its neighbor is producing 1$

often the way to move from 50 to 52 then 55 and so on is to improve things like water management - e.g. making sure upstream does not waste water, rain water is collected, and so on

there are numerous other example - they require coordination, organization, research (like experimentation) and so on ... and only little capital that every economy essentially has

so once you improve on these margins and earn the extra 2 cents per inch and so on ...

these extra cents now start *generating* surplus that can be plowed back as capital or investment

this is the virtuous cycle that we call growth - especially for poor countries

poor countries don't need to beg the rich - they have within them everything they need