Capital formation in New Zealand manufacturing industries 1910 to 1964

Abstract

This paper reports on the results of a project undertaken to measure the stock of capital employed in New Zealand manufacturing industry over the period 1910 to 1964. Various concepts are proposed in the economic literature to measure different aspects of capital, but each concept in its empirical evaluation is beset with problems. Economic development, however, has become of such general concern that no matter how difficult may be the problems of dealing empirically with something called 'capital', it is important to try. Some of the difficulties involved in an empirical investigation of capital are discussed in Part III of this paper. The measure of capital presented in this report is the market value of tangible reproducible capital employed by manufacturing industries during the last half century. The Report on Statistics of Industrial Production provides the basic data for this study. The Report is compiled from factory schedules completed each year by every factory in New Zealand engaged in manufacturing. A discussion of the statistics on capital expenditures contained in the Report, and the adjustments which must be made, is given in Part IV. In Part V, the method is described in detail, and is followed by the results. Parts III, IV and V are presented principally for those readers who may wish to study the capital estimates in detail. Other readers will possibly find the brief summary presented in Part II sufficient for their purpose, and so can proceed directly to the tables themselves. The tables give estimates of the market value of equipment, land and buildings employed by manufacturing industries. Expenditure on capital assets, whether or not such expenditure adds immediately to productive capacity, is simply referred to as 'wealth' formation, and is to be distinguished from 'capacity' formation, the increase in productive capacity which ultimately results from wealth formation. That is, capacity formation is the value of capital assets actually 'coming on stream' in the production period.