Capital (economics)

In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. A typical example is the machinery used in a factory. At the macroeconomic level, "the nation's capital stock includes buildings, equipment, software, and inventories during a given year." Capital is a broad economic concept representing produced assets used as inputs for further production or generating income.

What distinguishes capital goods from intermediate goods (e.g., raw materials, components, energy consumed during production) is their durability and the nature of their contribution. Capital provides a flow of productive services over multiple cycles, facilitating production processes repeatedly, rather than being immediately consumed, physically incorporated, or transformed into the final output within a single cycle. While historically often focused on its physical manifestation in physical capital goods, the modern understanding explicitly includes non-physical assets as well. The term "capital equipment" is often used interchangeably with "capital goods", and refers especially to significant, durable items—such as machinery, vehicles, or laboratory instruments—used by organizations to produce goods or deliver services.

Within economics, the capital stock is generally understood as the collection of these produced assets held by an individual, company, or nation at a point in time. This stock comprises both tangible (physical capital) and intangible capital (non-physical capital). Consequently, because these assets are varied in form and function, this stock is inherently heterogeneous.