What is CAPITAL FORMATION?

Question

This is related to my report in economics on PHYSICAL RESOURCES. It has something to do with INVESTING right?

Answer 1

it's complicated and I hope I will never need to know ;)

however wikipedia explains it here:

http://en.wikipedia.org/wiki/Capital_for...

Answer 2

Simple. It is investment. However this does not mean buying shares or houses or putting money into an ibd.

It is using money to build factories, roads, to produce toe produced means of production. The capital is formed. In the other cases, above, its ownership is transfered or the money to do this is made available through an intermediary.

Answer 3

Capital Formation :

Capital formation is a term used in national accounts statistics and macroeconomics. It basically refers to the net additions to the (physical) capital stock in an accounting period, or, to the value of the increase of the capital stock; though it may occasionally also refer to the total stock of capital formed. Thus, in United Nations System of National Accounts, capital formation equals fixed capital investment, the increase in the value of inventories held, plus (net) lending to foreign countries, during an accounting period. Capital is said to be "formed" when savings are used for investment purposes, often investment in production.

In the USA, statistical estimates for capital formation were pioneered by Simon Kuznets in the 1930s and 1940s.

For more details see the link...

http://en.wikipedia.org/wiki/Capital_for...