Do you think moving from an extralegal economy characterized by “dead capital” to a legal economy with “live capital” has the potential to increase trade and reduce poverty?
Prompt:
Do you think moving from an extralegal economy characterized by “dead capital” to a legal economy with “live capital” has the potential to increase trade and reduce poverty?
If yes, why and what is required to make such a change successful? If no, why and what will prevent such a change from being successful?
Solved by verified expert“Dead capital” refers to assets that are not formally recognized by the legal system and therefore cannot be used as collateral for loans or as a basis for creating wealth. In an extralegal economy, many assets, such as homes and small businesses, may be informally owned and therefore not recognized by the legal system.
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In contrast, a legal economy with “live capital” recognizes and formalizes property rights, allowing individuals and businesses to use their assets as collateral for loans, to access markets, and to engage in trade. This can stimulate investment and growth, create jobs, and reduce poverty.
By formalizing property rights, individuals and businesses can more easily secure financing, which can enable them to start or expand businesses, purchase equipment, and invest in education and training. This can lead to increased productivity, higher incomes, and more opportunities for trade and economic development.
Overall, moving from an extralegal economy characterized by “dead capital” to a legal economy with “live capital” can help create a more vibrant and inclusive economy, and reduce poverty by increasing opportunities for economic growth and development.
