capital accumulation


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capital accumulation

see CAPITAL FORMATION.

capital accumulation

or

capital formation

  1. 1the process of adding to the net physical CAPITAL STOCK of an economy in an attempt to achieve greater total output. The accumulation of CAPITAL GOODS represents foregone CONSUMPTION, which necessitates a reward to capital in the form of INTEREST, greater PROFITS or social benefit derived. The rate of accumulation of an economy's physical stock of capital is an important determinant of the rate of growth of an economy and is represented in various PRODUCTION FUNCTIONS and ECONOMIC GROWTH models. A branch of economics, called DEVELOPMENT ECONOMICS, devotes much of its analysis to determining appropriate rates of capital accumulation, type of capital required and types of investment project to maximize ‘development’ in underdeveloped countries (see DEVELOPING COUNTRY). In developed countries, the INTEREST RATE influences SAVINGS and INVESTMENT (capital accumulation) decisions, to a greater or lesser degree, in the private sector (see KEYNESIAN ECONOMICS) and can therefore be indirectly influenced by government. Government itself invests in the economy's INFRASTRUCTURE. This direct control over capital accumulation, and the indirect control over private investment, puts the onus of achieving the economy's optimal growth path on to the government. The nature of capital accumulation (whether CAPITAL WIDENING or CAPITAL DEEPENING) is also of considerable importance. See also CAPITAL CONSUMPTION, INVENTION, INNOVATION, CAPITAL-OUTPUT RATIO.
  2. the process of increasing the internally available CAPITAL of a particular firm by retaining earnings to add to RESERVES.
References in periodicals archive ?
This suggests that capital accumulation can also be interpreted as increases in human and knowledge capital, which do not necessarily have diminishing returns.
FNS's smoother earnings profile could, in a benign environment, eventually lead to gradual capital accumulation and a stronger equity base.
His topics are capital accumulation, concentration, and centralization; capital accumulation, transnational capital, and the exclusion of the periphery; the inclusion of the periphery in the process of global accumulation; Brazil in capital's globalization; and the possibility of a forced disconnection.
Amongst the reasons brought forward to explain this are that these theories were largely centred on capital accumulation, with policies designed by an elite which tended to disregard the input of workers and subsume their needs to that of capital.
A higher profit share may accelerate capital accumulation, contract the informal sectors, and eventually reverse the fall in the labour income share.
Capital accumulation occurs by withholding income from consumption to purchase capital, and the relative prominence of capital ([beta]) is determined by the balance between capital accumulation and the growth of the economy.
Following our initial public offering in September 2016, we have experienced strong returns and consequently rapid capital accumulation and solid capital levels.
Lebanon is generally known to have an educated workforce, and during the postwar rebuilding period it benefited from considerable capital accumulation. But it has also been subject to political setbacks that have sapped its energies.
He gives a stylized reconstruction of Hulsmann's argument by introducing a simplified equation for capital accumulation, for illustrative purposes only, whereby K stands for the amount of accumulated capital, T for the influence of taxation, and the letters A, B, C, D for other factors affecting the amount of capital:
"Improved profitability and modest asset growth will result in continued capital accumulation and support capital ratios," it said.
"In the bigger picture, the empirical evidence supports the idea that economic growth and human capital accumulation reinforce one another," the study stated.
When the emerging economies' growth stories began, the gap between their actual per capita incomes and long-run potential enabled rapid capital accumulation and strong technologyenabled productivity gains.

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