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Capital Consumption Allowance

Capital Consumption Allowance Definition

The Capital Consumption Allowance (CCA) is the percentage of the Gross Domestic Product (GDP) which is due to depreciation. The Capital Consumption Allowance measures the amount of expenditure that a country needs to undertake in order to maintain, as opposed to grow, its productivity. The CCA can be thought of as representing the wear-and-tear on the country's physical capital, together with the investment needed to maintain the level of human capital (eg to educate the workers needed to replace retirees).

Growth Domestic Product (GDP) equals Net Domestic Product (NDP) plus Capital Consumption Allowance.

 

GDP = NDP + CCA





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