----- Original Message ----- From: "Erik Reuter" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[EMAIL PROTECTED]> Sent: Monday, September 27, 2004 1:41 PM Subject: Re: Productivity Re: Br!n: some thoughts and quotes.
> On Mon, Sep 27, 2004 at 08:42:58AM -0500, Dan Minette wrote: > > > I found an interesting measure: the ratio of GDP capital stock. Since > > Where did you find this data? http://www.csls.ca/data/ipt1.asp >I would like to read about exactly what is > being measured and/or calculated. Are they measuring the (undepreciated) > dollar value of capital stock? >From the way they describe it, they are reporting the denominator in RONCE (Return on Net Capital Employed.) This is a pretty standard number for business. >Do they account for quality of capital > ($1000 of computer today is much more useful than $1000 of computer in > 1980). Also, I would like to see what the number looks like with the GDP > dependence removed, but you did not specify whether that was real GDP or > nominal GDP. Both the value of the capital and the GDP are given in inflation adjusted dollars. But, since the same factor is in the numerator and the denominator it doesn't matter. > > Indeed, this number dropped fairly steadily during the '90s (since > > its inverse increased). I'm not arguing that significant capital > > investments were not made in the '90s, but if one considers total > > capital, one finds that it decreased relative to GDP. > > You are saying that GDP increases more than capital stock. Isn't > that obviously going to be the case? Not when there is a big surge in total capital, because it should take a while for the GDP to catch up with the investment. Expanding companies should have a worse RONCE than established companies. The total capital employed in year X should be (capital in year X-1) - depreciation + investment. That has grown very slowly. Indeed, we can look at both the total capital (in constant 2000 billions of dollars) and the growth per year (in %). With the exception of '65, all values are 5 years backwards averages. '65 is a four year backwards average. 1965 5652 3.9% 1970 6942 4.2% 1975 8047 3.0% 1980 9349 3.0% 1985 10783 2.9% 1990 12357 2.8% 1991 12584 2.5% 1992 12789 2.3% 1993 13032 2.1% 1994 13298 2.0% 1995 13627 2.0% 1996 14011 2.2% 1997 14436 2.5% 1998 14897 2.7% 1999 15394 3.0% 2000 15917 3.2% 2001 16312 3.1% 2002 16608 2.8% > This doesn't change the fact that there was a massive and SUSTAINED > increase in investment from 1994 to 2001. I won't argue with you, but its interesting that it doesn't reflect itself in an accelerated growth in total capitol employed. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
