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Physical capital

Physical capital Definition

Physical capital refers to any manufactured asset that is applied production, such as machinery, buildings, or vehicles, which is one of the three primary factors of production (the other two are land and labor/workforce).

Additional meaning of Physical capital?

In general physical capital refers to any non-human asset made by humans and then used in production. Often, it refers to economic capital in some ambiguous combination of infrastructural capital and natural capital. As these are combined in process-specific and firm-specific ways that neoclassical macro-economics does not differentiate at its level of analysis, it is common to refer only to physical vs. human capital and seek so-called "balanced growth" that develops both in tandem.

The word "Physical" is used to distinguish physical capital from human capital (a result of investment in the human agent)) and financial capital. Physical capital may also refer to fixed capital.

Human capital

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