Definition

The total of gross fixed capital formation (investment or GFCF) is here shown as a share of GDP. GFCF reflects the acquisition, less disposal, of fixed assets, i.e. products that are expected to be used in production for several years. Acquisitions include both purchases of assets (new or second-hand) and the construction of assets by producers for their own use. Disposals include sales of assets for scrap as well as sales of used assets in a working condition to other producers. New Zealand, Mexico and some Central European countries import substantial quantities of used assets, which are included in GFCF.

Fixed assets consist of machinery and equipment; dwellings and other buildings; roads, bridges, airfields and dams; orchards and tree plantations; improvements to land such as fencing, levelling and draining; draught animals and other animals that are kept for the milk and wool that they produce; computer software and databases; entertainment, literary or artistic originals, and expenditures on mineral exploration. What all these things have in common is that they contribute to future production. This may not be obvious in the case of dwellings but, in the national accounts, flats and houses are considered to produce services that are consumed by owners or tenants over the life of the building.

In calculating shares, GFCF and GDP are both valued at current market prices. Three-year averages refer to the years 2006 to 2008 (end of period); and 1995 to 1997 (beginning of period).

For more statistics on economic, environmental and social issues visit online the OECD Factbook 2010.