Sustainable refers to the concept that point toward towards development from the economic social, human and natural characteristics. This clearly identifies the parallel prevalence of different elements of national wealth (Bliss 2014). There has regularly been instances when one form of capital i.e. the economic has risen on the expense of one or more forms of capital. To completely understand the concept of capital matrix framework a better understanding is required for complex interactions among the capitals.
The nature of capital has turned out to be a contentious issue for the economists and the public researchers. As identified in the academic literature the different aspects of capital have attracted much of the interest namely the accumulation of capital, creation of wealth, technical effectiveness, allocative efficiency and factors that underwrites to the scale and construction. Interest in the capital matrix studies have stated their focus on balanced development of the economy where at times conflict arises with the elements of investment projects, policies and procedures. As proposed by Tan (2014) so far numerous efforts have been made but the proposed rules provide unilateral meaning. They are considered difficult in assumptions and overall tools in the day-to-day decision making with one-sided meaning have turned out to be inflexible and weak.
Instead of the completely adopting quantitative approach Lauder (2015) have projected a qualitative approach that is expert based valuation of programmes and policies which creates an impact on the numerous capital models. The capital matrix framework was originally proposed by Carmichael, Archibald and Lund (2015) and was expanded further during 2000. The original solution was considered to be relocated from the expert based influence valuation methodology to create balance between financial and nature capital. The capital matrix approach is based on the forecast of positive, negative and unbiased impacts of projected policies on the quantified valuation criteria. The capital matrix approach is considered to be both qualitative and quantitative. The framework is regarded as qualitative for the reason that its effects are studied distinctly in context of each form of capital specifically.
The feature of capital and the contribution made in the creation of wealth is regarded as the confrontational subject for the social researchers. Capital not only represents the supremacy and wealth but it is also regarded as the maker of future wealth. As stated by Ferragina and Arrigoni (2017) each stock of capital that are obtainable currently determines the future production. When the economist reached an agreement on the theory of capital an agreement was soon extended on everything else by the researcher. Numerous capital concepts have been put forward and consequences of measurement are reliant on the viewpoint that an individual chooses for. Over the last decade’s researchers in the areas of capital have implemented extensive development in the theory of capital matrix (Rouxel et al. 2015). The development in the capital matrix theory is aimed at determining whether the sustainable resource remain constant or increase over the period.
Capitals are considered characteristically supplements instead of substitute in the provision of wellbeing. Therefore, an exhaustion of one asset can result good investment in another asset. This brings forward the question whether the total stock of capital is necessarily required to be maintained with the substitute among numerous forms of capitals or whether specific capital components are considered non-substitutable (Aldrich and Meyer 2015). In other words, the capital contributes to welfare in an exclusive way which cannot be simulated by additional form of capital. A higher stock of economies, human capital cannot necessarily guarantee the higher sustainability. A particular community with an equal opportunity for sustainable development can at times offset small stock of capital because of the policies that implement less undesirable trade-off among the different regional resources.
As identified in the preceding paragraph capital must not be assumed as fixed phenomenon. The total wealth comprises of the numerous forms of capital. Idea has been proposed by the ecological economist over the last decade. Initially, the researchers have shed their light primarily on the economy-nature relationship. At the initial stages the social and human capital has originated from the sustainable capital framework (Fitzsimons 2015). In the modern world the sustainable theory has been understood in broader sense. Corresponding to prevalence of numerous essentially different domains the sustainable theory is important measuring capital. Accountants have attempted to incorporate the ecological costs in the system of national accounts.
The indicator approach under the capital matrix framework addresses the identical problem in determining different capitals. The approach is largely implemented by the social researchers. The objective behind the implementation is that a small number of comparative easy to access vital indicators can successfully describe the vital aspects of the chief social phenomenon (Robb and Robinson 2014). The separate reflectors on economic, social and other medium of capital can turn out to be an important tool in capital matrix framework. One advantage of this tool is that the capitals can be particularly reported in its own terms. The capital matrix framework provides that the problems in measuring the capital in terms of non-monetary units makes it very difficult to form a conclusion on which the investors and policy makers can depend upon.
While the unassuming and even quantitative sustainability measures of capital continuous to remain immaterial several aspects of sustainability can be measured and expressed in a qualitative manner (Zeitun and Tian 2014). The capital matrix framework is considered to be appropriate though not compulsory in determining the matters of qualitative nature. The capital possesses the characteristics of quantity and quality elements. The element of quality is associated with the difference between acceptable and unacceptable trade-off among the capitals. The outputs policies are categorized as favourable and unfavourable. The favourable aspects represents the required output along with any positive related external effects that might be related with it. The unfavourable characteristics of the capital matrix framework comprises of the negative effects that comprises of the capital depreciation (Geske, Subrahmanyam and Zhou 2016). The unfavourable impacts refers to capital stocks. The primary objective of qualitative assessment techniques is not only limited to correct measure of effects but also characterising them as non-acceptable, undesirable, ordinary and positive.
Preceding the discussion from the above stated capital matrix framework the model is presented on the case assessment of the provincial development programme. As stated by Faccio and Xu (2015) the initial point is then changed into the input-output matrix of the capitals and the probability of introducing the standard social accounting approach. This provides the simulation of accounting framework for qualitative pieces of information.
As stated by Zeitun and Tian (2014) a distinction among the capital inputs and outputs represents the capital matrix framework. The current attempt of forming input-output approach in determining capital cannot be entirely considered exclusive under the capital matrix framework. The effort is dedicated towards creating prolonged measure of wealth. Robb and Robinson (2014) followed the input-output approach when they undertook the capital matrix approach as the input in the development of procedure along with the other forms of capital and forming an output of the procedure. Capital is also considered in identical perspective by the OECD in order to differentiate between the capital assets and input in the production procedure with capital asset acting as the output of the net worth or wealth. Investments made in the capital asset and their preservation are viewed as the inputs to the economic procedure and their ultimate outcome at the end of the programming period, actual or estimated forms the output of the regional capital funds.
These matrix provides relational view of the trade-off and leads to cross sustainability among the capitals that would most probably realise with the application of concerned provincial programme (Aldrich and Meyer 2015). The objective of adapting the capital matrix framework is to provide an insight into the relations among the domains of commodities and capitals.
In terms of accounting an account is regarded as the tool which helps in displaying the changes in each of the sector in order to create a balance which compares two sides of the account. In the capital matrix framework, both the input and the output capital accounts represents the changes that are recorded in the item of equation (Ferragina and Arrigoni 2017). This focuses on the approach of measuring the changes in the capitals. The essay confirms that the capital matrix framework comprises of the greater applicability then for the policy analysis purpose.
Conclusion:
The objective of the essay is attained. Any framework can effectively provide one conclusive and uniform visualization of the capital but this certainly does not reflect the systematically demanding perceptive on the capital development framework. The study effectively lay down the suggestion that complexity of phenomena such as capital matrix can be termed as simple to understand but the conditions is treated to be complex. Simultaneously when the complex phenomena are decomposed to the main factors it results in separate series of unconnected one directional relations that capital matrix framework represents in a simple and consistent manner. Therefore, the capital matrix model provides a radical challenge to the inertia in policy making.
Reference List:
Aldrich, D.P. and Meyer, M.A., 2015. Social capital and community resilience. American Behavioral Scientist, 59(2), pp.254-269.
Bliss, C.J., 2014. Capital theory and the distribution of income(Vol. 4). Elsevier.
Carmichael, D., Archibald, J. and Lund, G., 2015. Social Capital Theory in Social Media Research.
Faccio, M. and Xu, J., 2015. Taxes and capital structure. Journal of Financial and Quantitative Analysis, 50(3), pp.277-300.
Ferragina, E. and Arrigoni, A., 2017. The rise and fall of social capital: requiem for a theory?. Political Studies Review, 15(3), pp.355-367.
Fitzsimons, P., 2015. Human capital theory and education. In Encyclopedia of educational philosophy and theory (pp. 1-4). Springer Singapore.
Geske, R., Subrahmanyam, A. and Zhou, Y., 2016. Capital structure effects on the prices of equity call options. Journal of Financial Economics, 121(2), pp.231-253.
Lauder, H., 2015. Human capital theory, the power of transnational companies and a political response in relation to education and economic development. Compare: A Journal of Comparative and International Education, 45(3), pp.490-493.
Robb, A.M. and Robinson, D.T., 2014. The capital structure decisions of new firms. The Review of Financial Studies, 27(1), pp.153-179.
Rouxel, P.L., Heilmann, A., Aida, J., Tsakos, G. and Watt, R.G., 2015. Social capital: theory, evidence, and implications for oral health. Community dentistry and oral epidemiology, 43(2), pp.97-105.
Tan, E., 2014. Human capital theory: A holistic criticism. Review of Educational Research, 84(3), pp.411-445.
Zeitun, R. and Tian, G., 2014. Capital structure and corporate performance: evidence from Jordan.
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