Capital

Capital, in economics, those goods that are used in production, such as plant and equipment (fixed capital) and raw materials, components, and semifinished goods (circulating capital), as opposed to goods intended for immediate consumption. To classical economists, 3 main factors of production were capital, labor, and land. Modern economists add management skill and human capital (education and training). The decision to invest in capital is determined by the cost and availability of labor and natural resources and the cost of capital (e.g., interest on the money used to buy equipment). Modern industrial countries are highly capitalized, but among the less developed countries the lack of capital is often acute.