Capital Formation, Capital Stock, and Capital Output Ratios (Concepts, Definitions, Data, 1850-1975)

Doblin, C.P. (1978). Capital Formation, Capital Stock, and Capital Output Ratios (Concepts, Definitions, Data, 1850-1975). IIASA Research Memorandum. IIASA, Laxenburg, Austria: RM-78-070

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Abstract

There is considerable concern about the possible general capital shortage and, more specifically, about the availability of capital to permit the expansion of traditional energy supplies and the transition from conventional to nonconventional fuel sources with appropriate changes in patterns of transportation. Future long-term capital needs may further be increased by the demands for environmental protection.

The study is concerned with the development of capital in the past. It goes back to the mid-nineteenth century for presently developed countries (US, UK, FRG, France, Japan) to look at capital formation and capital stock. A more recent past, 1950 to date, is studied for the growth of capital stock and capital output ratios for the US, the FRG, and the world.

The purpose was to detect from macroeconomic statistical facts any clues on the behavior of capital formation, including the impact of innovation industries which might be of relevance for the future availability of capital stock.

The historical chapter on capital does not attempt to study all aspects of capital formation. No reference is made to the institutional question, except for long-term series of bank and prime rates, and the capital market has been ignored including the question of how much of the capital requirements could be met through self-financing. Likewise, fiscal policies (redistribution of income, corporate taxation) or monetary theory (i.e how changes in money supply determine a nation's economic course) that bear on the origin of capital formation are not considered. Yet it is hoped that the many data compiled for the study -- which also discusses concepts, definitions, and sources -- may help to establish the range, if not the absolute amounts, of some of the variables used in modeling capital demands by the energy sector.

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