List components of gross capital formation
Components of gross capital formation include:
1. Gross fixed capital formation: This refers to the investment made in long-term assets such as buildings, machinery, equipment, and infrastructure. It represents the creation of new physical capital or the addition of value to existing assets.
2. Changes in inventories: These include the increase or decrease in stocks of raw materials, work-in-progress, and finished goods held by businesses. Changes in inventories are considered a form of investment as they represent the accumulation or reduction of goods for future production or sale.
3. Acquisitions less disposals of valuables: This category includes the purchase or sale of valuable items like precious metals, artworks, antiques, and jewelry. Such transactions are included in gross capital formation as they involve the transfer of wealth from one asset to another.
4. Additions to non-produced assets: This includes expenditures on intangible assets like patents, copyrights, trademarks, and software. These assets do not have a physical existence but are considered a form of capital as they contribute to the productive capacity of an economy.
5. Net acquisitions of new and existing buildings and other structures: This component captures the net change in the stock of residential and non-residential buildings, as well as other structures like roads, bridges, and dams.
6. Net purchases of machinery and equipment: This refers to the net change in the stock of machinery and equipment used in production, including vehicles, tools, and industrial machinery.
7. Net purchases of intellectual property products: This includes the net change in the stock of research and development (R&D) expenditure, software, and databases.
These components together represent the gross capital formation in an economy and reflect the investment made by households, businesses, and the government to expand and improve the productive capacity of the economy.
Gross capital formation refers to the aggregate value of all investments made within an economy during a specific period of time. It includes investments in both tangible assets (such as buildings, machinery, and equipment) and intangible assets (such as research and development, software, and copyrights). The components of gross capital formation can be classified as follows:
1. Fixed capital formation: This refers to investments in tangible assets that are intended for long-term use in production, such as buildings, machinery, vehicles, and infrastructure.
2. Inventory investment: This includes the amount of investment made in increasing or decreasing inventories of goods held by businesses. It represents the change in the value of inventories over a specific period.
3. Residential investment: This component represents investments made in the construction, improvement, or renovation of residential buildings, including houses, apartments, and condominiums.
4. Government capital formation: This refers to investments made by the government in public infrastructure, such as roads, bridges, schools, hospitals, and public utilities.
5. Business investment: This includes investments made by businesses in production capacity, machinery, equipment, and other productive assets. It represents the private sector's contribution to gross capital formation.
6. Intellectual property products: This component covers investments in intangible assets, such as research and development (R&D), software development, artistic originals, and copyrights.
Note that the specific components of gross capital formation may vary slightly depending on the source or framework used for calculation.
Gross capital formation refers to the total value of physical assets (such as buildings, machinery, equipment, and infrastructure) that are produced or acquired during a specific period of time. It is an economic indicator that represents investment in fixed assets.
The components of gross capital formation can vary slightly depending on different classifications and methodologies used. However, the following are generally considered as key components of gross capital formation:
1. Gross fixed capital formation: This includes the total value of new physical assets that are produced or acquired for use in production processes. It includes investment in buildings, machinery, equipment, vehicles, and other durable goods.
2. Changes in inventories: This refers to the value of changes in stock levels of goods, materials, and finished products held by businesses. An increase in inventories implies a positive contribution to gross capital formation, while a decrease implies a negative contribution.
3. Acquisitions of valuables: This component includes the acquisition of valuables, such as precious metals, gemstones, art, and antiques, which are held for investment purposes or personal consumption.
4. Net acquisition of non-produced assets: Non-produced assets are assets that are not created through production processes but are nonetheless integral to economic activities. This component includes the acquisition or disposal of natural resources (such as land, mineral rights, and timber), patents, copyrights, trademarks, and other intangible assets.
It's important to note that the specific categorization of components may differ across different national accounting systems or datasets. To get the most accurate and up-to-date breakdown of gross capital formation, it is recommended to refer to official statistical publications, reports from national statistical agencies, or international organizations like the International Monetary Fund (IMF) or World Bank.