In economics, capital refers to assets that are used as productive inputs for further production of goods and services. Capital can be physical items such as tools, buildings, and vehicles that are used in the production process. However, economists have increasingly focused on broader forms of capital, such as investment in skills and education, which can be viewed as building up human capital or knowledge capital, and investments in intellectual property, which can be viewed as building up intellectual capital.
From an economists perspective, capital is key to the functioning of any unit, whether that unit is a family, a small business, a large corporation, or an entire economy. Capital is deployed to help shape a company's development and growth, and it usually comes with a cost. For debt capital, this is the cost of interest required in repayment, while for equity capital, this is the cost of distributions made to shareholders.
Capital is one of the four major factors of production, the others being land, labor, and entrepreneurship. It is distinguished from financial capital, which includes the debt and equity accumulated by businesses to operate and expand. Capital is artificial and must be created by human hands and designed for human purposes, which means time must be invested before capital can become economically useful.
