What the national treasury can buy through state procurement that can increase the country's economic strength, military power, scientific and technological level, and political influence.
The very crucial problem with the other definitions is the problem of not effectively distinguishing between a country's strength and its potential.
A nation, no matter how rich its people are, must be collected by the state as taxes to be spent by the state in order to be turned into national strength. No matter how good the products of an enterprise are, they must be bought back by the state and used by the state in order to become national strength. No matter how high the level of scientific and technological personnel is, they must be employed by the state and serve the state before they can be turned into national strength. Otherwise, all these things are only the potential of the country, not its national strength. A country's overall national power actually depends on the level and effectiveness of the country's financial expenditures.
Next I will use India as an example of the decisive influence of finance on national power:
1. China's GDP is about 5 times that of India's, but China's fiscal revenue is about 8 to 11.5 times that of India's (depending on different statistics). So India as a country has about half of its GDP that cannot be converted into national power. The national power gap between India and China is greater than the GDP gap.
It should be noted that there are four main taxes in a country: customs duty, corporate income tax, VAT/excise tax, and personal income tax. India is a predominantly VAT country, as is China, and India's tax rates are higher than China's for all four major taxes. The immediate problem with India's finances is that a large amount of GDP cannot be collected in taxes and has to lie in statistics. This is why we often say that India's GDP is very false.
2, India's fiscal expenditure. China and India's fiscal expenditure is actually about the same ratio as the GDP. The gap between fiscal expenditure and revenue is mainly made up by debt. So this country is relying on a large amount of debt, barely holding up a face to compete with China. But India's national debt and there are two serious problems: foreign exchange national debt accounted for a very high proportion; national debt interest rates are very high. Although the proportion of India's national debt is not very high (compared with the United States and Japan), but the burden of government debt is very large, the debt has no potential for expansion. After the Modi government came to power, India's national debt has risen all the way, and the interest rate on the national debt alone consumes hundreds of billions of dollars of foreign exchange every year. As a result, India's fiscal spending is, first, unsustainable and, second, a serious overdraft of its fiscal potential. At present, the Indian government to maintain this face has been difficult, in recent years has begun to gradually sell state-owned assets to maintain financial.
3, the effectiveness of fiscal spending. India's fiscal spending has two huge weaknesses:
Important equipment, equipment dependent on imports. We often talk about independence and autonomy, but many people's understanding of independence and autonomy stays on what to do by the international blockade. However, countries like India can not do independent autonomy, important assets dependent on imports brought about by the immediate problem is that procurement can not be used to tax up the local currency, only to consume foreign exchange. In other words, India's fiscal revenue is not effective in building a significant portion of the country's strength. And industry can not be independent of the country, the exchange rate capacity is extremely weak, need to rely on borrowing from abroad to obtain foreign exchange. So it results in nation building being constantly sucked out of the country by foreign debt.
The vast majority of financial expenditure is used to maintain their own functioning, can not be used for investment, and then generate national strength. To military spending, for example, India's military spending in personnel spending is actually equivalent to about 65% of China's (per capita is very little difference, think of the Indian military personnel to eat, wear and live in what conditions, how to spend the money?) The Indian military spends about 65% of China's military spending on personnel (per capita, the difference is not much). Equipment purchases cost only one-fifth as much, and training costs only one-fifteenth as much. So most of their military spending is eaten up and not translated into military power. India's space is sort of a bright spot, often bragging that it only cost tens of millions to go to the moon, and tens of millions to go to Mars, yet the fact is that India spends billions of dollars a year on space, and most of it is not used for anything serious.
Financial capacity is ultimately reflected in the national strength of the result is: seven years of Modi's tenure, India's important weapons procurement projects, bought 36 Rafale fighter jets, not yet all delivered; important space science projects, the moon ship two, but also failed; important infrastructure projects, railroads and highways are only completed a few hundred kilometers. At the same time its northern neighbor, procured ten times more 3.5 and 4 generation fighter jets; built a hundred times more high-speed railroads and highways; carried out a back-of-the-moon landing, a lunar sample return, a Mars landing tour, a space station, a Global Positioning System, a quantum satellite, and a dark matter satellite.
As a comparison, India has a higher GDP than the UK, but is significantly weaker than the UK. This is because:
Britain's fiscal revenue is 1.5 times that of India; Britain's national debt is higher than India's, but its international credit is also higher than India's, with a low interest rate on its national debt, and the British pound itself is an international currency, which can be more easily haircut in local-currency national debt, and so has a stronger ability to raise money; Britain's revenue is higher, and the credit on its national debt is also higher, resulting in a stronger ability to spend money; Britain's scientific research ability is stronger
The UK has a much stronger scientific research capacity; although the industrial production capacity is not good, but the key equipment and equipment still have the ability of self-production, the UK's international procurement environment is also stronger than India, so the efficiency of the UK's financial expenditure is much higher than India.
On the whole, although the UK's GDP is not high on the books, the real power of the country is two or three times that of India.