In a developing economy, scarcity of capital may have more to do with a lack of incentive for citizens to save and invest productively than with any absolute scarcity of income available for capital accumulation.

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In developing economies, the scarcity of capital often stems from a lack of incentives for saving and investing, rather than an absolute lack of income. Factors such as high inflation, unstable financial systems, and lack of trust in financial institutions can discourage saving and investment, leading to a situation where capital remains scarce despite the presence of income that could potentially be used for capital accumulation.

In a Developing Economy, Scarcity of Capital May Have More