Fisheries Economics

6.1.4.2. Investment

Investment is an important concept in macro economics. It is an indispensable input to accelerate economic development of an economy. Developing nations lack adequate capital to invest in modern industries. Hence foreign aid was considered necessary to accelerate economic development. But, donors have vested interests and foreign aid is often attached with strings (conditions). Hence foreign aid actually turn out to benefit the donor more than the receiving country.

Investment means real investment. That is the additional investment to the already existing stock of capital assets such as buildings, factories, plants and machineries and additions to inventories (stock of goods).

Investment is a synonym for capital formation. It does not include what had already been spent on existing assets and includes what is spent additionally on nation’s durable equipment and stocks of materials and products.

Although investment takes place both in public and private sectors, the investment in public sector is not taken into account. In private sector, investment occurs as follows:

i) Real, planned investment in fixed capital, particularly the capital equipment (excluding buildings).

ii) Real, planned investment in buildings and

iii) Real, planned investment in inventories.