Final answer:
Improving governmental policy capacity can be done by investing in human and physical capital, and supporting technological advancements, all within the framework of supportive government policies and a stable market-oriented economy.
Step-by-step explanation:
Improving governmental policy capacity is essential for effective and sustainable economic growth. One way to enhance this capacity is by promoting human capital deepening, which involves investing in education and training to improve the skills and competencies of the workforce. Another method is through physical capital deepening, which refers to the increase in the stock of capital goods such as factories, machinery, and infrastructure that can improve productivity. Additionally, supporting technological gains is vital for staying competitive in the global market; this can be achieved by fostering innovation and research and development.
Apart from these economic factors, it's also crucial to have a market-oriented economy with supportive government policies that facilitate business operations and protect property rights. Ensuring a stable political environment and implementing policies that encourage private-sector investment can both be fundamental for achieving long-term growth.