Total capital and economic growth |
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Authors: | John W Kendrick |
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Institution: | (1) The George Washington University, USA |
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Abstract: | In contrast to the official estimates of gross private domestic investment and associated capital stocks prepared by the Bureau
of Economic Analysis (BEA), the author presents estimates of total investment and capital, human and nonhuman, tangible and
nontangible, by all sectors of the U.S. economy. Total investment is 3.1 times the BEA estimate in 1929, rising to 4.1 times
in 1990. It accounts for almost half of adjusted GDP in the latter year.
As hypothesized, real total capital stocks rise at about the same 2.9 percent average annual rate as real gross domestic product
1929–90, 0.1 percentage points more in the total economy and 0.2 points less in the predominant business sector. Increases
in nontangible capital (mainly education, training, health, and research and development—“R&D”-) largely explain the growth
in total tangible factor (capital) productivity in the whole economy. Nontangible, human capital has grown relatively faster
in the business sector than in the entire economy, helping to explain its more rapid productivity advance.
The author recommends that when BEA shifts to the U.N. standard system of accounts, it include nontangible and human tangible
investments and capital in “satellite” accounts, as well as tangible investments for all sectors in the core accounts. This
will greatly facilitate the analysis of economic growth.
Presidential Address at the Thirty-Sixth Atlantic Economic Society Conference, October 7–10, 1993, Philadelphia, Pennsylvania. |
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