- Physical capital definition
A country's physical capital, usually simply referred to as 'capital', is any physical asset that a country has that contributes towards the construction trade and machinery production. Therefore it can be things such as machines.
- Human capital
The opposite to physical capital is human capital; which is the type of capital that can never be taken away from a person. This includes knowledge, experience, personality traits and education.
Physical capital is often referred to as the workforce and is just as important as physical capacity and human capacity that drives a country forward and encourages productivity and development. There is also financial capital; which refers to the actual money that a country has.
According to Andrew Atkeson and Patrick J. Kehoe in their paper on 'Measuring Organizational Capital', 9% of output in not accounted for in the US so it is extremely important for physical capital to be accounted for because 9% is a huge amount.
- Econometrics
Econometrics uses the skills of many economists who can use estimations, analyze statistical data, use hypothesis tests and carry out various surveys and sampling methods. They will then apply the findings to econometric theories and develop models which can provide forecasts and predictions to measure the physical capacity within a country.
Econometrics has changed over recent years as the developments of computers makes the construction of graphs and display of information a lot easier to evaluate. This ease of evaluation means trends can be spotted and makes the process much simpler.