The process of increasing the stock of capital. This is one of the main sources of economic growth in the short and medium run. Whether capital accumulation can raise long-run growth is not obvious. This is because a high capital stock can only be maintained by significant investment to replace depreciated capital, and because long-run growth is due to increases in the quality of capital or introduction of new capital goods. Some empirical studies suggest that capital accumulation plays a minor or no role in economic growth, while others find that it has a significant positive effect on the long-run growth rate.
|Reference: Oxford Press Dictonary of Economics, 5th edt.|