Get A Theoretical Analysis Of Capital Formation And Growth In Nigeria

Capital is the most important factor of production particularly in a developing economy. Capital Formation is defined as that part of country's current output and imports which is not consumed or exported during the accounting period, but is set aside as an addition to its stock of capital goods.

Capital Formation is defined as that part of country's current output and imports which is not consumed or exported during the accounting period, but is set aside as an addition to its stock of capital goods. Total Capital Formation can be broadly classified into. Gross Fixed Capital Formation.

It was ascertained that in the short run, gross fixed capital formation had no significant impact on economic growth; while in the long run; the VAR model estimate indicates that gross fixed capital formation, total exports and the lagged values of GDP had positive long run relationships with economic growth in Nigeria ...

Capital formation occurs in three stages, which are the creation of savings, the mobilization of savings, and the investment of savings.

Capital formation is the net accumulation of capital goods, such as equipment, tools, transportation assets, and electricity, during an accounting period for a particular country. Generally, the higher the capital formation of an economy, the faster an economy can grow its aggregate income.

Thus the total payment made to a factor of production for an economist is the sum of three distinct elements: the fixed cost; the variable cost, inclusive of a normal profit, and a pure or extra profit, which may include a risk element.

"Total capital formation" in national accounting equals net fixed capital investment, plus the increase in the value of inventories held, plus (net) lending to foreign countries, during an accounting period (a year or a quarter).

Functions of the Nigerian capital market Mobilizes savings from surplus economic units for channeling into deficit units for the purpose of industrial and economic development. By carrying out these functions, the capital market plays an important role in promoting a nation's socio-economic development.