Physical Capital

Physical capital is a tangible asset used in the production of goods and services. It is one of the primary factors of production, alongside land and labor, and is essential for economic growth and development. Key Features Tangible Nature Physical capital consists of physical, man-made assets rather than natural resources. Purpose Used to facilitate production, increase efficiency, and generate goods and services.

Example: Machinery and equipment used in factories Factories and production facilities Transportation networks like trucks and delivery systems Tools and infrastructure essential for business operations Economic Significance Enables higher productivity by supplementing labor. Forms the foundation for industrialization and economic expansion. Investments in physical capital can boost output and competitiveness in the economy. Example A textile company invests in new weaving machines and expands its factory. These assets represent physical capital, which helps produce more fabric efficiently.