25 Years IWH

Stock of fixed assets

Gross fixed capital formation
Gross fixed capital formation includes the purchase of permanent and reproducible fixed assets as well as created fixed assets and larger, value increasing repairs. Fixed assets are classified as permanent if they have a useful life of at least one year. Gross fixed capital formation is comprised of the acquisition of new assets and the balance of purchases and sales of used assets. New fixed assets are subdivided in machinery and equipment, other assets and constructions. Machinery and equipment includes machines, mechanical plants, operating and business equipment, vehicles as well as similar assets which are not firmly attached to the constructions. Other assets comprise investments in intangible fixed assets (e.g. software and copyrights), livestock and crops as well as costs of transfer of undeveloped land. In the publication, the results on these other assets are pooled together with new equipment. Apart from residential and non-residential buildings, the term constructions also includes other constructions (roads, bridges, airports, canals and the like) and installations which are firmly attached to the constructions, for instance elevators, heating, ventilation and air conditioning systems, gardens and fences.

Stock of fixed assets
The stock of fixed assets comprises all produced assets which are used in production repeatedly or permanently for at least one year. It is subdivided in equipment (machinery and equipment, vehicles), other assets (intangible assets (e.g. software and copyrights), livestock and crops) and constructions (residential and non-residential buildings, other constructions (roads, bridges, airports and canals and the like). This also includes installations which are firmly attached to the constructions, for instance elevators, heating, ventilation and air conditioning systems). The calculation of the stock of fixed assets is conducted according to the internationally customary perpetual-inventory-method. This method assumes that the capital stock available today is comprised of asset investments from the past.

The stock of fixed assets is given at replacement cost and price-adjusted as chain-linked index. The price which would have been paid, if the asset was purchased new in the year under review is taken as a basis for the replacement cost. If the real or quantitative development of the stock of fixed assets is to be presented and comparable over a course of several years, the fixed assets are also given at replacement cost of the previous year  – regardless of when they were acquired. By linking the calculated sequence of index numbers, long and comparable time series can be obtained.

Capital-labour ratio
The capital-labour ratio is the ratio of the capital stock to the number of employed persons and therefore represents the average capital per worker.

Capital productivity
Capital productivity is the ratio of GDP or GVA to the capital stock.

Source: Regional Accounts (VGR der Länder) (http://www.vgrdl.de/VGRdL/MethDef/definitionen.jsp); calculations by the IWH.

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