What is the capital formation?

The term commonly used in the study of macroeconomics has capital creation with capital supplements in a given accounting period. Pioneer Simon Kuznets during the 30th and 40th years of the 20th century is announced by some financial analysts as a fundamental way of evaluating the real financial image of the country. Understanding the current level can help economists understand the status of the national economy because the number helps to identify the level of economic expansion and the incidence of increased production in a given country.

In many cases, this image is considered the same as the sum of several factors. Capital creation has to do with investment from fixed capital within the country, as well as an increase in the value of different stocks of assets held and net value of assets, which was lent to other countries during the considered period. This may include the transfer of savings to financing loans of non -deceased other aspects of the economy. Depending on the exact application, the number may allow depreciation or exclude any depreciation for deductions withbonded by depreciation.

There are several focused applications between changes in capital creation that deserve notes. The gross fixed capital formation excludes all assets that cannot be correctly described as fixed capital assets. The creation of human capital is a newer variation that focuses on the inclusion of human work, talents, skills and resources that are used to train new work to replace pensioners.

While many economists consider this approach an important method of understanding the state of the national economy, others question the value of the process. Often, problems such as price inflation, fixed assets consumption, and the fact that one domestic entity also becomes the investment of another entity is cited as important factors that do not participate in the image calculation. However, supporters claim that these and other elements can be explained by submitting the creation of capital by others inZorors to represent a wider image of the economy.