Capital Accumulation: Analyzing Its Impact on Economic Growth and Social Inequality

Introduction

Capital accumulation is a fundamental concept in economics, referring to the process of increasing assets through the investment of resources, which can include money, property, and goods. This report aims to analyze the dual impact of capital accumulation on economic growth and social inequality. While capital accumulation is often heralded as a crucial driver of economic development, it also raises questions regarding its implications for social equity. The purpose of this paper is to critically examine how capital accumulation influences economic growth and the resultant effects on social inequality, drawing upon objective evidence and theoretical frameworks.

The Relationship Between Capital Accumulation and Economic Growth

Capital accumulation plays a pivotal role in stimulating economic growth. The classical economic theory, particularly as articulated by economists like Adam Smith and David Ricardo, posits that increased capital investment leads to higher productivity and, consequently, greater output. Investment in capital goods—such as machinery, infrastructure, and technology—enhances the efficiency of production processes, resulting in an expa