Capital Formation


Capital Formation
A term used to describe net capital accumulation during an accounting period. Capital formation refers to net additions of capital stock such as equipment, buildings and other intermediate goods. A nation uses capital stock in combination with labour to provide services and produce goods; an increase in this capital stock is known as capital formation.

Generally, the higher the capital formation of an economy, the faster an economy can grow its aggregate income. Increasing an economy's capital stock also increases its capacity for production, which means an economy can produce more. Producing more goods and services can lead to an increase in national income levels.


Investment dictionary. . 2012.

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  • capital formation — expansion of capital or capital goods through savings, which leads to economic growth. Bloomberg Financial Dictionary * * * capital formation ˌcapital forˈmation noun [uncountable] ECONOMICS the process of collecting capital for use in investment …   Financial and business terms

  • capital formation — See fixed capital formation …   Big dictionary of business and management

  • capital formation — n. transfer of savings from private people and governments to the business sector for investment …   English contemporary dictionary

  • capital formation statement — itemization of changes in a business property …   English contemporary dictionary

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