Gross private domestic investment is the measure of physical investment used in computing

GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...

in the measurement of nations'

economic activity Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes w ...

. This is an important component of GDP because it provides an indicator of the future

productive capacity Productive capacity is the maximum possible output of an economy. According to the United Nations Conference on Trade and Development (UNCTAD), no agreed-upon definition of maximum output exists. UNCTAD itself proposes: "the productive ''resources'' ...

of the economy. It includes replacement purchases plus net additions to

capital assets A capital asset is defined as property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession. It includes all kinds of property, movable or immovable, tangible or in ...

plus investments in inventories. From 2002 to 2011 it amounted to 14.9% of GDP, and from 1945 to 2011 was 15.7% of GDP (BEA, USDC, 2013).

Net investment In economics, net investment is spending which increases the availability of fixed capital goods or means of production and goods inventories. It is the total spending on newly produced physical capital (fixed investment) and on inventories (inven ...

is gross investment minus depreciation. Of the four categories of GDP (investment,

consumption Consumption may refer to: *Resource consumption *Tuberculosis, an infectious disease, historically * Consumption (ecology), receipt of energy by consuming other organisms * Consumption (economics), the purchasing of newly produced goods for curren ...

, net exports, and

government spending Government spending or expenditure includes all government consumption, investment, and transfer payments. In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual o ...

on goods and services) it is by far the least stable. Gross private domestic investment includes 4 types of investment: * Non-residential investment: Expenditures by firms on

capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...

such as tools, machinery, and factories. * Residential Investment: Expenditures on residential structures and residential equipment that is owned by landlords and rented to tenants. * Change in inventories (or stocks): The change of firm inventories in a given period. (

Inventory Inventory (American English) or stock (British English) refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying the sha ...

or stock is the goods that are produced by firms but kept to be sold later.)

References

National accounts Gross domestic product {{macroeconomics-stub