Business sources of finance to buy assets, such as buildings, machinery, stocks, or investment in other firms. Equity capital is supplied by shareholders, either by buying shares or by ploughing back profits into the business. Loan capital or debt is borrowed from a financial institution or individual, and interest is paid. Capital gearing or (US) leverage is the ratio of capital raised by debt to equity; a high gearing means a heavy reliance on debt.
In politics, a capital (also called capital city or political capital — although the latter phrase has a second meaning based on an alternative sense of "capital") is the principal city or town associated with a country's government.
Seats of government in major substate jurisdictions are often called "capitals", but this is typically the case only in countries with some degree of federalism, where major substate jurisdictions have an element of sovereignty. For example, the seat of government in a state of the United States of America is usually called its "capital", but the main city in a region of England is usually not.
Historically, the major economic center of a state or region often becomes the focal point of political power, and becomes a capital through conquest or amalgamation. The capital naturally attracts the politically motivated and those whose skills are needed for efficient administration of government such as lawyers, journalists, and public policy researchers. A capital that is the prime economic, cultural, or intellectual center is sometimes referred to as a primate city. Such is certainly the case with London and Buenos Aires among national capitals, and Irkutsk or Salt Lake City in their respective state or province.
Capitals are sometimes sited to discourage further growth in an existing major city. The government of South Korea announced in 2004 it would move its capital from Seoul to Yeongi-Gongju — even though the word Seoul itself means "capital" in the Korean language. The decline of a dynasty or culture could mean the extinction of its capital city as well, as occurred with Babylon and Cahokia. And many modern capital cities, such as Abuja, Canberra and Ottawa, were deliberately fixed outside existing economic areas, and may not have established themselves as new commercial or industrial hubs since.
Unorthodox capital city arrangements
See also: List of multiple capitalsA number of cases exist where states or other entities have multiple capitals, and there are also several states that have no capital. In others, the "effective" and "official" capital may differ for pragmatic reasons, resulting in a situation where a city known as "the capital" is not, in fact, host to the seat of government. Likewise, occasionally the official "capital" as called is may be host to he seat of government, but is not always the geographic origin of political decision-making. Bolivia: Sucre is still the constitutional capital, but most of the national government long abandoned that region for La Paz. Côte d'Ivoire: Yamoussoukro was designated the national capital in 1983, but most government offices and embassies are still located in Abidjan. Nauru: Nauru, a tiny country of only 21 square kilometres (8 sq mi), has no capital city. The Netherlands: Amsterdam is the constitutional national capital even though the Dutch government, parliament, supreme court and the palace of the queen are all located in The Hague. In South Africa, the administrative capital is Pretoria, the legislative capital is Cape Town, and the judicial capital is Bloemfontein, the outcome of the compromise that created the Union of South Africa in 1910. In Germany, the executive and legislative capital is Berlin, although a portion of various ministerial back offices are located in the former West German capital of Bonn.
Capital as symbol
With the rise of modern empires and the nation-state, the capital city has become a symbol for the state and its government, and imbued with political meaning. Unlike medieval capitals, which were declared wherever a monarch held his or her court, the selection, relocation, founding or capture of a modern capital city is an emotional affair. Other restored capital cities include Moscow after the October Revolution. A symbolic relocation of a capital city to a geographically or demographically peripheral location may be for either economic or strategic reasons (sometimes known as a "forward capital" or spearhead capital). The selection or founding of a "neutral" capital city — i.e.
Strategic importance of capitals
The capital city is almost always a primary target in a war, as capturing it usually guarantees capture of much of the enemy government, victory for the attacking forces, or at the very least demoralization for the defeated forces.
In old China, where governments were massive centralized bureaucracies with little flexibility on the provincial level, a Dynasty could easily be toppled with the fall of its capital.
National capitals were arguably less important as military objectives in other parts of the world, including the West, due to socioeconomic trends toward localized authority, a strategic modus operandi especially popular after the development of feudalism and reaffirmed by the development of democratic and capitalistic philosophies. Exceptions to these generalizations include highly centralized states such as France, whose centralized bureaucracies could effectively coordinate far-flung resources, giving the state a powerful advantage over less coherent rivals, but risking utter ruin if the capital is taken;
Largest national capital cities
Some of the largest cities in the world are not national capitals. The largest national capitals on each continent, by urban/metropolitan area population, are:
Africa: Cairo (11,146,000) Asia: Tokyo (35,237,000) Europe: Moscow (10,400,000) North America: Mexico City (17,809,471) Oceania: Wellington (445,400) South America: Buenos Aires (14,230,000)
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