I’m confused as to the economic definition of capital. For accounting I take capital expenditures to mean whatever you have to put on the balance sheet, such as land and equipment…right? In one of the readings I saw it say our top exports were cars and capital. What does that mean that our exports are capital? And I keep seeing the phrase capital per hour of labor. What does that mean exactly? Sorry this sounds like something I shouldn’t be asking but I am just cant seem to grasp it.
Do you have a reference for that reading? Off the top of my head I think the article was referring to capital goods: yellow-goods and plant and machinery.
Capital means something like resources that can be used for producing valuable goods. To say that our main export is capital is approximately like telling your kids that you keep them around because you like giving them money. We export capital because we send money abroad. Generally we do this because we are consuming more from overseas than we export to them, so we give them capital - claims on future productivity and assets in the US.
My GUESS is that they are literally referring to money. When you capitalize a company you are setting it up by injecting money in the form of either debt or equity. I suspect that they may be referring to foreign investment by U.S. companies, i.e. acquiring or opening foreign subsidiaries, lending to foerign companies, etc. Once again, a guess. But the words capital and capitalize are used in MANY contexts in finance and accounting. EDIT: or it means what JoeyD posted just before me.
Then what is capital per hour hour of labor?
isn’t that a STRICTLY economics term…
Yes its all over all the economic theories. GDP per person rises when capital per hour of labor rises. What capital???
dancingqueen Wrote: ------------------------------------------------------- > What does that > mean that our exports are capital? what Joey said. > And I keep > seeing the phrase capital per hour of labor. What > does that mean exactly? they’re using the term loosely, but it generally refers to the inputs required for a worker to produce something. It could be human capital (i.e. yrs of schooling), or physical capital (a machine or some other thechnology) for example.