Capital Accumulation

In general terms capital accumulation means collecting properties that have a certain amount of value. In the same vein it might be said that the main purpose behind capital accumulation is to create or increase the amount of wealth of a person.

Explanation of Capital
Capital has often been explained as an asset or a group of assets that are being invested by an investor or a group of investors with a motive of making some profit.

Capital Accumulation in Economics, Marxian Economics and Accounting
Capital accumulation has often been considered the same as investment in the domains of economics, Marxian economics and accounting. This is considered to be especially applicable in case of real capital goods.

Following are the consequences of accumulation of real capital goods:
Centralization of Capital
Concentration of Capital

Various Meanings of Capital Accumulation

Following are some other meanings of the term Capital Accumulation:

Human capital accumulation is a new form of education and training. It focuses on enhancing the skill levels and the working capabilities of the labor force
Making real investment in ways of production that are physical
Putting money in tangible assets that are not productive. Examples would be real estate properties of residential type whose worth increase over a period of time
Putting money in paper assets
Non-Financial Capital Accumulation
In the context of economic growth, non-financial capital accumulation is an important phenomenon. Any extra amount of investment always helps in increasing the scale at which the production is carried out. The surplus investment also helps in bringing about more chances for employment. If all this does not happen the entire amount of physical wealth, which is meant for trading would always stay the same.
Capital Formulation in Macroeconomics and Econometrics
In the domains of econometrics and macroeconomics the term capital formulation is preferred over the term capital accumulation. However, the United Nations Conference on Trade and Development (UNCTAD) uses the word capital accumulation.
Measurement of Capital Accumulation

Capital accumulation has often been determined as one of the following:
Alteration in the worth of assets that are possessed by anyone
Financial worth of investments
The statisticians working with the governments employ the following in order to calculate capital accumulation:
Balance Sheets
Direct Surveys
Tax Data

 

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Last Updated on : 1st July 2013

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