Meaning & use
physical capital
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Meaning
noununcountabletechnical
The man-made goods, such as machines, buildings and tools, that a business or economy uses to produce other goods and services.
Grammar: Usually has no plural and no article: physical capital grows with investment.
Patterns
- invest in physical capital
- stock of physical capital
A bakery's ovens, delivery vans and shop fittings count as its physical capital.
Economists measure how much physical capital each worker has to use.
The war destroyed much of the country's physical capital, including bridges and factories.
Common combinations
- invest in physical capital
- The firm chose to invest in physical capital rather than hire more staff.
- stock of physical capital
- A larger stock of physical capital can raise output per worker.
- accumulate physical capital
- Fast-growing economies often accumulate physical capital quickly.
- depreciation of physical capital
- The depreciation of physical capital means machines must be replaced over time.
- human and physical capital
- Both human and physical capital drive long-term growth.
Synonyms and how they differ
- capital goods
- Capital goods names the individual items like machines, while physical capital is the whole collection treated as an economic input.
- fixed capital
- Fixed capital stresses assets that last a long time in accounts, whereas physical capital is the broader economic idea that includes anything tangible used in production.
- equipment
- Equipment is an everyday word for tools and machines only, while physical capital also covers buildings and infrastructure.
Opposites
Word family
- capital noun
- wealth or assets used to produce more wealth
- capitalize verb
- to provide a business with money or to take advantage of something
- capitalism noun
- an economic system based on private ownership of capital
- capitalist noun
- a person who owns capital and invests it
Commonly confused: physical capital or financial capital? physical capital or human capital?
physical capital vs financial capital
Financial capital is money and investments, while physical capital is tangible equipment and buildings.
physical capital vs human capital
Human capital is the skill and knowledge of workers, not a physical thing.
Practice
Which of these is the best example of a company's physical capital?
Choose one answer.
Physical capital means tangible goods used in production, such as machines. Training is human capital and cash is financial capital.
Make it your own
Write a sentence using “physical capital”, then check it and compare it with the examples above.