Abstract
In contrast to the official estimates of gross private domestic investment and associated capital stocks prepared by the Bureau of Economic Analysis (BEA), the author presents estimates of total investment and capital, human and nonhuman, tangible and nontangible, by all sectors of the U.S. economy. Total investment is 3.1 times the BEA estimate in 1929, rising to 4.1 times in 1990. It accounts for almost half of adjusted GDP in the latter year.
As hypothesized, real total capital stocks rise at about the same 2.9 percent average annual rate as real gross domestic product 1929–90, 0.1 percentage points more in the total economy and 0.2 points less in the predominant business sector. Increases in nontangible capital (mainly education, training, health, and research and development—“R&D”-) largely explain the growth in total tangible factor (capital) productivity in the whole economy. Nontangible, human capital has grown relatively faster in the business sector than in the entire economy, helping to explain its more rapid productivity advance.
The author recommends that when BEA shifts to the U.N. standard system of accounts, it include nontangible and human tangible investments and capital in “satellite” accounts, as well as tangible investments for all sectors in the core accounts. This will greatly facilitate the analysis of economic growth.
Similar content being viewed by others
References
Denison, Edward F.Accounting for U.S. Economic Growth, 1929–69, Washington, DC: The Brookings Institution, 1974.
Eisner, Robert.The Total Incomes System of Accounts, Chicago, IL: University of Chicago Press, 1989.
Griliches, Zvi. “Returns to Research and Development Expenditures in the Private Sector,” in John W. Kendrick and Beatrice N. Vaccara, eds.,New Developments in Productivity Measurement and Analysis, Chicago, IL: University of Chicago Press, 1980.
Kendrick, John W.Productivity Trends in the U.S., Princeton, NJ: Princeton University Press for the National Bureau of Economic Research, 1961.
__The Formation and Stocks of Total Capital, New York, NY: National Bureau of Economic Research, 1976.
National Science Foundation.National Patterns of R&D Resources, NSF92-330, Washington, DC, 1992.
U.S. Department of Commerce, Bureau of Economic Analysis.Fixed Reproductive Wealth in the U.S., 1925–89, Washington, DC: GPO, January 1993.
Author information
Authors and Affiliations
Additional information
Presidential Address at the Thirty-Sixth Atlantic Economic Society Conference, October 7–10, 1993, Philadelphia, Pennsylvania.
Rights and permissions
About this article
Cite this article
Kendrick, J.W. Total capital and economic growth. Atlantic Economic Journal 22, 1–18 (1994). https://doi.org/10.1007/BF02301693
Issue Date:
DOI: https://doi.org/10.1007/BF02301693