PROBLEMS OF MEASURING CAPITAL IN LESS DEVELOPED COUNTRIES

Abstract

The general problems of distinguishing between theoretical concepts and practical measures concerning capital are considered and the difference between various stock and flow measures of capital and their respective uses is defined. The qualifications and limitations to these measures in the interpretation of output changes are also discussed. Attention is concentrated on the initial, basic problem of how to measure gross capital stock and the special difficulties involved in using the perpetual inventory simulation method and census procedures in less developed countries to derive such estimates are broadly defined. Some of the special problems encountered in an attempt to undertake an inventory of industrial capital assets in Lesotho are also referred to and the paper concludes by expressing the view that there are at present far more important issues demanding higher statistical priority in less developed countries than the evaluation of capital stocks. Copyright © 1976, Wiley Blackwell. All rights reserved