We concentrate on forms of wealth that might be referred to as “capital.” Capital in traditional economics referred to enduring physical assets that raise the value of production, such as machines and structures. Financial assets are also traditionally referred to as capital by economists. The originator, Alfred Marshall defined capital as “that part of wealth which is devoted to obtaining new wealth” or “wealth that has a productive return” in the context of neoclassical economics.
Since then, the definition of capital has been broadened to encompass assets other than financial and tangible assets. Economic growth theory includes the idea of human capital, which is defined by Becker (1962) as resources that are entrenched in people such as their education, talents, and health (Uzawa, 1965; Lucas, 1988; Romer, 1990; Barro and Sala-i-Martin, 1995). Long-term economic growth has also been stressed as requiring the development of intellectual capital (Romer, 1986, 1990). 2
More recently, sociologists and political scientists have argued that social capital is essential for achieving pros- perity and have defined it as “properties of social structure, such as networks, norms, and trust that promote coordination and cooperation for mutual benefit” (Putnam, 1993). According to ecological economics, investing in natural capital, which is described by Costanza and Daly (1992) as “a stock that provides a flow of valuable products and services into the future,” such as renewable energy, is beneficial.
There are numerous ways riches might produce non market benefits. In contrast to natural capital, which can give environmental pleasures like scenic views or clean air and water, human capital can bestow consumer benefits, such as a stronger capacity to appreciate or influence their surroundings (Schultz, 1961). (Costanza and Daly, 1992). Even material prosperity can have numerous non-monetary welfare advantages, such as raised aspirations, social influence, or political clout (Sherraden, 1991).
Individuals, families, businesses, communities, regions, States, and countries may all benefit from understanding wealth and wealth production. Gaining net wealth necessitates net saves and investments at all scales, while the focus given to various asset classes will vary depending on the decision-maker. An individual, for instance, is aware of his or her own personal physical, financial, and human capital assets, but local government authorities might be primarily worried about investments in local public infrastructure and amenities.
Although there are opportunities and limitations that are unique to rural wealth creation compared to wealth creation in metropolitan settings, wealth creation concepts are applicable in all contexts. In particular, the methods used to produce wealth in rural areas are the focus of this report. This is at least in part due to the fact that one of USDA’s primary objectives is to promote sustainable rural development. Additionally, wealth generation in rural areas frequently differs from wealth creation in urban situations in terms of opportunities, limits, and requirements.
For instance, in rural locations as opposed to metropolitan ones, natural resources and facilities are typically more significant as a form of wealth and as a contributor to economic development. On the other hand, due to their low population density, distance from population centers, and the fixed costs of such assets, many rural areas lack access to infrastructure and facilities that are typical in urban areas, such as airports, highways, hospitals, universities, wastewater treatment systems, and high-speed Internet. For similar reasons, rural areas frequently lack other types of resources, most notably human capital. Strategies for rural economic development must take into account these various asset endowments.