4.7 Gross fixed capital formation

Gross fixed capital formation or investment consists of fixed assets that are used in production for more than one year and that have "significant" value. Fixed assets that are in production for less than one year, are counted as intermediate consumption. According to ESA95 (3.102) "fixed assets are tangible or intangible assets produced as outputs from processes of production that are themselves used repeatedly, or continuously, in processes of production".

Tangible fixed assets include buildings (including dwellings), machinery and equipment; and intangible fixed assets include mineral exploration, computer software and literary and artistic originals. Furthermore, gross fixed capital formation is defined as including additions to the value of land and other non-produced assets.

Resident producers may either purchase or build these fixed assets themselves, and gross fixed capital formation consists of these acquisitions of fixed assets less disposals. The general rule is that gross fixed capital formation includes all durable goods going to the producer that have an expected service life of more than one year and the value of which is not recorded as an expense for the year when it was purchased. ESA95 also lists a number of borderline cases for which it has been separately agreed whether or not they are included.

Examples