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Accounting P

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Physical capital

Physical capital

Capital in the form of physical goods, either fixed capital or stocks and work in progress. Physical capital is contrasted with both financial and human capital. Financial capital includes both cash holdings of firms, and net trade credit extended to customers. Human capital includes both technical know-how, whether or not embodied in patents, and the skills of the workforce. The ability of economies to recover rapidly after wars and natural disasters is thought to indicate that physical capital is less important than human capital as a long-run determinant of productivity.

Reference: Oxford Press Dictonary of Economics, 5th edt.