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Physical capital

Physical capital (economics) refers to infrastructural capital and natural capital in some ambiguous combination. As these are combined in process-specific and firm-specific ways that neoclassical macro-economics does not differentiate at its level of analysis, it is common to refer only to physical vs. human capital and seek so-called "balanced growth" that develops both in tandem.

Such analyses, however, fail to make distinctions considered critical by many modern economists:

natural capital grows, while infrastructural capital must be built
even "balanced" economic growth includes many processes thought to be, or lead to, uneconomic growth
the rest problem - human capital requires rest and must make choices whether to seek rest or income, which physical capital does not make

Accordingly the designation as physical has come into some recent dispute.

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This article is licensed under the GNU Free Documentation License. It uses material from the Wikipedia article "Physical capital".