capital formation


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Capital formation

Expansion of capital or capital goods through savings, which leads to economic growth.

Capital Formation

The transfer of capital from individuals, organizations, or government for business use. For example, a widget company experiences capital formation when people buy widgets. The company can then use the profit to encourage investment or to expand its operations, among other options. Capital formation is crucial to economic growth.

capital formation

The creation of productive assets that expand an economy's capacity to produce goods and services. Private savings facilitates capital formation by allowing resources to be diverted to corporate investment rather than individual consumption.

capital formation

or

capital accumulation

  1. the process of increasing the internally available CAPITAL of a business by retaining earnings to add to RESERVES.
  2. the process of adding to the net physical CAPITAL STOCK of an economy as a means of increasing the economy's capacity to produce goods and services. INVESTMENT by businesses in new plant and equipment is one important source of capital formation, as is investment by the government in INFRASTRUCTURE (roads, railways, etc.).

capital formation

see CAPITAL ACCUMULATION.
References in periodicals archive ?
The data for previous years show share of household sector in gross fixed capital formation (GFCF) has declined to 31.
Federal tax, spending, and regulatory policies may interfere with capital formation and diminish the prospects for economic growth to the extent that they create a different level and distribution of capital goods than would have otherwise existed.
As part of its FINRA360 initiative, the Financial Industry Regulatory Authority issued three requests for comments Wednesday on the capital formation process, proposed amendments to rules for underwriting arrangements and a proposed safe harbor from equity and debt research rules for desk commentary.
In recent years some progress has been made toward a more efficient regulation of capital formation, principally as a result of some congressional preemption of state registration authority.
and include a morning panel discussion that will explore how capital formation options are working for small businesses after the implementation of the JOBS Act.
9% on a quarterly basis, while gross fixed capital formation increased by 0.
According to the State Statistical Office data, the total value of Gross Fixed Capital Formation in the Republic of Macedonia for 2013 was 11 billion denars.
The total fixed capital formation in the extractive industry activity rose from Dh7.
In this study the focus is to empirically estimate determinants of capital formation in countries in transition, especially those in Central and Eastern Europe.
Issa said, 'The committee is concerned that the SEC's excessively burdensome regulation is discouraging capital formation in the US.
Breaking through the access barrier; academic capital formation informing policy in higher education.
The indicator business investment is defined as the gross fixed capital formation by the private sector as a percentage of GDP.